Investor euphoria in Brazil is over. Brazil’s former Central Banker, Henrique Meirelles said those very words. Gone are the days when free money was flowing around the world looking for the next 10% gain. Speculation over Brazil joining the ranks of investment grade are behind us. That ended when Brazil was upgraded to BBB by Standard & Poor’s in April 2008. Read Ken Rapoza’s article in Forbes.
Economists cut their forecasts for Brazil’s economic growth in 2012 to 2.72 percent from 2.99 percent in the prior week, after the government reported weaker-than-expected growth in the first quarter, a weekly central bank survey showed (Reuters).
Business activity in the Brazilian services sector fell in May for the first time since July 2009, a report showed, demonstrating that manufacturers’ persistent woes have started to drag on the main engine of Brazil’s recent economic growth. Years of steady growth in a wide range of services – from hairdressing to hotels and restaurants – have helped keep Brazil’s unemployment rate near record lows and prevented a recession in the world’s sixth-largest economy (Reuters).
Brazil’s inflation rate fell more than economists expected in May, pushing the annual pace below 5% for the first time since September 2010. Monthly inflation slowed to 0.36% from 0.64% in April (MercoPress).
SPLIT SECOND POLL
Brazil should soon secure clearance to ship corn to China, which is expected to become one of the world’s biggest importers of the grain, Brazil’s agriculture ministry said (Reuters).
Brazil’s government trimmed its 2011/12 soybean crop estimate after drought ravaged output in the world’s second biggest producer this season, but raised its forecast of corn output to a record (Reuters).
Brazil’s JBS, the world’s largest meat company, said it would sue environmental organization Greenpeace for what it called false claims that could cause it to lose business and hurt its image. In a report it released this week, Greenpeace accused the company of breaking an accord that JBS and other Brazilian meat packers signed in 2009 promising not to purchase cattle raised on deforested pastures. Greenpeace said JBS had bought cattle raised on Indian reserves and other restricted areas (Reuters).
The amount of sugar waiting to be loaded at the main ports in Brazil, the world’s largest producer, climbed 37 percent over the past week after rain disrupted deliveries (Bloomberg).
Illegally smuggled into Brazil 14 years ago, transgenic soy has proved a boon to domestic farmers and now accounts for 85 percent of total production. But five million Brazilian farmers are now locked in a legal feud with US biotech giant Monsanto, the GM soy seed manufacturer, and are refusing to pay crop royalties (MercoPress).
Etihad Airways, United Arab Emirates flag carrier has unveiled plans to fly to Brazil, the airline’s first South American destination. The daily Sao Paulo flights, which are expected to start in June 2013, will be the first direct air link between Abu Dhabi and any South American country (MercoPress).
Car dealers in Brazil expect sales in June to pick up to the fastest pace of the year, an industry group said, building on a weak May recovery as the local auto industry tries to clear out the highest inventories in nearly four years (Reuters).
BANKING & FINANCE
Bankers remain upbeat on the development of a new tax-exempt infrastructure debt security in Brazil even after an attempt to launch the asset class last week ended in failure (Reuters).
Small and mid-size banks in Brazil are solid and have adequate capital levels, central bank chief Alexandre Tombini said, a day after the authority seized a mid-sized lender over irregularities. The central bank took over control of Banco Cruzeiro do Sul and placed it under the administration of banking deposit fund FGC for 180 days (Reuters).
Emilio Botin president of Santander, Spain’s largest bank and one of the leading EU financial institutions said that Brazil is the top priority for the group since it is the source of 30% of its global earnings and anticipated the opening of more branches in merit to the country’s economic stability and social progress (MercoPress).
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MINING & STEEL
South Korean steelmaker POSCO said that it was not considering buying German steelmaker ThyssenKrupp’s factories in Brazil and the United States (Reuters).
OIL & GAS
Chevron, the second-largest U.S. oil company, faces problems regaining its Brazilian oil-drilling rights because it has not explained how it plans to “mitigate” problems at an offshore field, Magda Chambriard, Brazil’s chief oil regulator, told reporters (Reuters).
The gap between Brazilian and international fuel prices is narrowing as world oil prices fall, reducing the need to raise domestic gasoline and diesel prices, Chief Executive Maria das Graças Foster of state-led oil company Petrobras said (Reuters).
Vivo SA, Tim Participacoes SA, Oi SA, America Movil SAB, who operates under the Claro brand in Brazil, and Sky Brasil Servicos Ltda are among companies that plan to bid on the country’s 4G technology June 12 auction, according to the telecommunications agency, known as Anatel. George Soros’ Sunrise Telecomunicacoes Ltda also plans to bid on the auction, Anatel said in an e-mailed statement. All interested groups have already filed the required documents as well as their price proposals, according to the agency (Bloomberg).