BRAZIL WEEKLY’S BRAZIL’S NEXT 10 HOTTEST BUSINESS CITIES
No doubt the biggest and most important business centres of Brazil are the megacities of Sao Paulo and Rio de Janeiro and do not forget most other state capitals like Belo Horizonte, Salvador da Bahia, Recife, Fortaleza, Curitiba and Porto Alegre. But Brazil is big and there are plenty of other fast developing cities, not being state capitals. So for a minute forget Sao Paulo, Rio and those other 2014 World Cup host cities and check out Brazil Weekly’s Brazil’s Next 10 Hottest Business Cities.
Capital goods maker Iochpe Maxion, generic drugmaker Hypermarcas and planemaker Embraer are among the companies that will benefit from the 60.4 billion reais ($33 billion) package of tax cuts and low-cost loans aimed at reviving a flagging industrial sector. The extension of subsidized loans by state development bank BNDES and the elimination of a payroll tax will boost industrial stocks in the short term, JPMorgan Securities said. Rousseff wants to revive the ability of factories to create well-paid jobs – the main engine behind Brazil’s emergence as a global economic heavyweight over the past decade (Reuters).
José Márcio Camargo, a full professor (“titular”) of economics at the Catholic University of Rio de Janeiro (“Pontifícia Universidade Católica do Rio de Janeiro – PUC-RJ”), with specialization in labor and microeconomics (he has a Ph.D. from MIT), says that the measures in the program to stimulate the industrial sector announced “do not resolve the problem… because they are mostly more of the same” (Agencia Brasil).
Brazil’s economy is stepping on the gas, and with a weak first quarter behind it, the country has a good two quarters of growth ahead before investors start turning away. In fact, some investors are already looking elsewhere as they anticipate a return to higher inflation and higher interest rates by the end of the second half of 2012. They are starting to move money to other risk markets, like Mexico, says Carlos Constantini, chief strategist and director of research for Itau Unibanco in São Paulo (Forbes).
Brazil’s manufacturing sector expanded in March for the third consecutive month, albeit at a slower pace, fueling hopes of an economic rebound into 2012 after a flurry of government stimulus measures (Reuters).
Inflation in Brazil slowed more sharply than expected in March as all components rose at a lower pace except food and fuel, backing up the central bank’s case for near record-low interest rates as it tries to revive economic growth (Reuters).
According to a special report on Brazil, Fitch Ratings believes that the country’s current slowdown is cyclical in nature and that economic growth is likely to return to its potential rate (MercoPress).
Furniture maker Unicasa and shareholders plan to raise up to 732 million reais ($402 million) in an initial public offering, as companies in Latin America’s largest economy defy a recent wave of risk aversion to lure new investors (Reuters).
ARCADIS, the international consultancy, design, engineering and management services company, today announced that its Brazilian subsidiary ARCADIS Logos, as part of a consortium, has signed a US$146 million contract with Norte Energia S.A. to provide owner’s engineering services to the Belo Monte hydroelectric power plant project in the Xingu River, in the state of Pará in northern Brazil (Reuters).
Camargo Correa, Brazil’s second-largest construction group, launched a bid for the 68.1 percent it still does not own of Portuguese cement producer Cimpor, according to a securities filling (Reuters).
International Business Machines Corp. (IBM), the world’s largest computer-services provider, bought a 20 percent stake in the technology unit of Brazilian billionaire Eike Batista as it expands to emerging markets. IBM was also awarded a $1 billion contract to provide technology services to EBX for 10 years (Bloomberg).
Cisco Systems Inc. said it will spend more than $1 billion reais ($546.6 million) in Brazil in the next four years to boost manufacturing in the South American nation and step up investment in local startups (Bloomberg).
Drought in Brazil shrunk the world’s second-largest soybean crop to an estimated 65.2 million tonnes this 2011/12 season, down nearly 2 million tonnes from the March forecast of 67.1 million tonnes (Reuters).
JBS, the world’s largest meatpacker, expects its U.S. poultry unit Pilgrim’s Pride to report a profit for 2012, after a net loss last year, on hopes demand for protein will gain momentum throughout 2012 (Reuters).
Japan’s Mitsubishi Corp said it bought a 20 percent stake in Ipanema Coffees, one of Brazil’s top coffee farms, which covers an area the size of New York City’s Manhattan island (Reuters).
Solazyme Inc finalized a joint venture agreement with agriculture group Bunge Ltd to build a 100,000-tonne sugar-to-oil production facility in Brazil (Reuters).
The Brazilian biofuels industry will advance under a modern and improved Forest Code, without deforestation or damage to native vegetation, according to the President of the Brazilian Sugarcane Industry Association (UNICA), Marcos Jank. He made the point during a series of meetings with business leaders and key biofuels industry stakeholders, held on March 29 and 30 in England (Unica).
Brazilian airline Gol Linhas Aereas’ decision to cut as many as 100 flights daily will not affect the regulatory review of its takeover of rival WebJet, according to the head of Brazil’s antitrust agency Cade (Reuters).
TAP’s Brazilian routes might make it a must-buy should IAG’s Oneworld partner Lan Airlines SA of Chile choose to exit the alliance following its impending merger with Sao Paulo-based Tam SA, a member of the Star group, leaving IAG without an ally in the BRIC country, Latin America’s largest economy (Bloomberg).
US air industry giant Boeing announced that it will establish a research and technology centre in Sao Paulo that will work with Brazil’s leading researchers and scientists to develop aerospace technologies (MercoPress).
BANKING & FINANCE
Fitch Ratings has affirmed all ratings of Banco do Nordeste do Brasil S.A (BNB). It’s National Long-Term Rating for instance was seet at ‘AAA(bra)’, Outlook Stable (Reuters).
Itaú Unibanco Holding named Gustavo Murgel as head of its asset management unit, a highly profitable area in which Brazil’s largest nongovernment bank wants to boost its client base (Reuters).
State-controlled lender Banco do Brasil said on Wednesday it is lowering interest rates and growing its outstanding loans to boost credit and bolster growth (Reuters).
Buyouts led by private equity and sovereign wealth funds should help propel merger and acquisition activity in Brazil this year after a flat first quarter, according to investment bankers (Reuters).
BTG Pactual and shareholders could raise up to 4.1 billion reais ($2.2 billion) in an initial public offering that may turn the investment banking powerhouse controlled by billionaire André Esteves into one of the world’s most valuable banks (Reuters).
Authorities identified a small oil leak off the shores of Rio de Janeiro, the latest in a series of spills that has raised safety concerns over the development of some of the world’s largest petroleum reserves (Reuters).
Check out the March bulletin of BMF Bovespa.
MINING & STEEL
Brazil cracked down on multinational commodities firms with rules to block them from shifting tax liabilities to more favorable countries. The measure by Brazil’s tax authority comes a day after the government granted $5.5 billion in tax breaks aimed largely at domestic manufactures. Under new rules, the Brazilian units of companies such as Vale, Bunge, Cargill, Louis Dreyfus, Glencore and Noble Group must value transactions with overseas units of the same company using international price benchmarks (Reuters).
Anglo American said it plans to invest $2 billion this year in its Brazilian iron ore mine Minas-Rio, the company’s biggest project globally (Reuters).
Vale, the world’s No. 2 mining company, expects to win permission “within months” to unload its big, new iron-ore ships at Chinese ports, a move that will help ensure efficient delivery of raw materials to China’s growing economy, a senior executive told Reuters.
The Vale Beijing, an ore carrier that leaked after its ballast tank cracked while loading its first cargo in Brazil more than four months ago, is going to South Korea, where it was built, for inspections (Bloomberg).
OIL & GAS
A Brazilian federal prosecutorlaunched his second 20 billion real ($10.9 billion) lawsuit against U.S. oil company Chevron and driller Transocean, doubling the stakes against the companies as critics call him as overzealous (Reuters).
A judge gave permission to one of the 17 Chevron and Transocean employees facing criminal charges over a November offshore oil spill to leave the country, documents released by a federal court on W edn esday showed. The permission is conditional on the payment of a 500,000 real ($275,000) bond, the court said (Reuters).
SBM Offshore N.V. of Rotterdam announced that contracts for the twenty year charter and operation of FPSO Cidade de Ilhabela for the north part of Sapinhoá field (former Guara Area) development in the pre-salt area, offshore Brazil, have been executed with GUARA BV and with BM-S-9 Consortium (Reuters).
Brazilian oil equipment and service provider Lupatech said that it canceled $779 million of contracts with state-controlled oil company Petrobras as it moved to slash investment and restructure debt (Reuters).
TNK-BP, Russia’s third-largest oil producer, gained approval from Brazil’s petroleum regulator to conclude a $1 billion deal with HRT Participacoes em Petroleo SA to explore for oil (Bloomberg).
Petrobras will boost gasoline imports by about a third to 80,000 barrels a day this year amid rising demand in Brazil, Folha de S. Paulo reported, citing company Refining Director Paulo Roberto Costa (Bloomberg).
Petrobras assured that it has complied with all terms of its Argentine Patagonia Neuquén province oil exploitation contract, following provincial governor Jorge Sapag’s announcement of the termination of the concession contract in Veta Escondida area (MercoPress).
PDG Realty, Brazil’s biggest homebuilder, cut back new project launches this year after cost overruns stemming from outsourced construction led to a surprise fourth-quarter loss (Reuters).
Homebuilder Gafisa posted a net loss of 1.093 billion reais ($599.13 million) in 2011 as the company reviews changes to its structure and operations to return to profit (Reuters).
Brazil will launch a satellite for military purposes and to expand broadband Internet service throughout the country, Communications Minister Paulo Bernardo Silva said, adding that officials hope to have the satellite operational in time for the 2014 soccer World Cup tournament in the South American nation (LAHT).