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Brazil:Where one goes all follow December 2009 IXE-BANIF Market Analysis

We are now in the last month of the year and, after a doubtful start, in the midst of the crisis hurricane, it should end on a positive note, with a more than 70% appreciation. Therefore, December should not be a month of risk. Investors will attempt to guarantee the gains so far realized.

Brazil – Monthly Allocation – December 2009 Report

A new scare marked the end of November. However, this only gave investors a chance to take a breather. Dubai’s debts do not seem to cause much of a worry. The main creditor is the UK, with the exposure of other regions, including the USA, being less than 15%.

Economic data releases few and far between this month

Little economic data will come out this month, both in the USA and Brazil. In Brazil, investors look for a strong recovery in GDP for 3Q09, with release of figures expected for December 10 and with the Copom minutes being released on the 17. In the USA, investors expect the release of sales figures for “Black Friday”, that should indicate the strength (or weakness) of Christmas Sales. In addition, we will have one more FOMC meeting on the 16 and 3Q09 GDP on the 22.

The growth of the US economy still depends very much on the resources injected into it by the Federal Government. Inflation is not a problem, and should not be for some months. Therefore, the FED should maintain interest rates at their present level, at least for the next six months.

Things seem to be getting better. The Real Estate sector, although still weak, shows various signs of recovery. The truth is that the panic generated by Dubai is from this sector. On the other hand, as it is a concentrated crisis, it is hardly likely to spread to other regions.

The pre-salt area becoming a reality

The pre-salt area still awaits the approval of Law 9541/09, but Petrobras is already taking steps to prepare for its implementation. One step is the creation of a Minorities Commission to follow the development of the “transfer of rights with compensation” process through which the Government capitalizes Petrobras using oil reserves. Another is the acceptance of Federal Public Debt bonds by minority shareholders’ for the proposed Petrobras capital increase.

Performing the same as the Ibovespa guarantees the year’s result

This month, we opted to have a portfolio that balances well with the Ibovespa as we believe that the result for the year is a given and thus expect the last month of 2009 to be flat. Therefore, we aimed at maintaining our portfolio gains in 2009 above 70%.

Outperforming the Ibovespa – Recommended Portfolio (Long)

Share – Catalysts/Fundamentals

BPNM4 – Rumors of the possible sale increase in personal credit during Christmas

BRTO4 – Most discounted share in the Oi Group

BTOW3 – Internet Christmas sales should grow strongly

CSNA3 – Sales to the domestic market continue to increase

ELPL6 – 1Q10 dividend should yield at least 8%

EQTL3 – A stock with low liquidity that should be less volatile

ITUB4 – Continued increase in credit to all sectors

KLBN4 – Cardboard price increases should result in a strong 4Q09

MMXM3 – Sale of a stake in the company should be above investor expectations

PCAR5 – Food and non-food Christmas sales

PETR4 – increase in daily volume

SUZB5 –Cardboard and pulp price increases

TLPP4 – Defensive stock that should announce dividend payout in December

VALE5 – Price negotiations start in December with expectations of a 10% increase

Short suggestion for December

NETC4 – incrase in competition with the sale of GVT to Vivendi

Source: IXE – BANIF, 01.12.2009

Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, News, , , , , , , , , , ,

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