FiNETIK – Asia and Latin America – Market News Network

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Latin America: Investors News Letter 18 April 2013

MEXICO

Mexico Peso Declines as U.S. Earnings Crimp Outlook for Exports

Mexico says Nestle to sell Pfizer baby food business

MEXICO CITY – Swiss food giant Nestle will sell the assets of U.S. pharmaceutical company Pfizer’s baby food business in Mexico, a business it acquired globally in an $11.85 billion deal last year, Mexico’s competition watchdog said on Monday.

Analysis: Mexico’s smaller homebuilders set to gain as top three struggle

MEXICO CITY – Mexico’s top three homebuilders, facing heavy debt burdens and holding land where Mexicans no longer want to live, will sell fewer homes this year, leaving a market wide open for smaller rivals or even private equity funds to snap up business.

Mexican manufacturing: from sweatshops to high-tech motors

SILAO, Mexico – Made in Mexico is increasingly more likely to mean cars than clothes as the country’s manufacturing sector moves away from the low-skill, high-volume production lines of the past toward more sophisticated products.

VIP Interview: Enrique Peña Nieto, forging the future

Enrique Peña Nieto, President of Mexico, on a new spirit of democracy and cooperation, and the economic future of Mexico.

BRAZIL

Itau Bet on Stocks Outside Brazil Leads Latin America Funds

QItau Unibanco Holding SA has found a winning strategy for the Itau Latam Pacific mutual fund: avoiding shares from the bank’s home country, Brazil.

 Brazil’s Votorantim Cimentos files for $5.4 billion IPO

Votorantim Cimentos S.A., Brazil’s biggest cement producer, on Wednesday filed with regulators to raise up to $5.4 billion in an initial public offering of its units.

Brazil clears Pão de Açúcar’s appliance stores deal

BRASILIA/SAO PAULO – Grupo Pão de Açúcar SA , Brazil’s biggest retailer, won regulatory approval on Wednesday for its 2009 purchase of the Casas Bahia and Ponto Frio appliance chains in exchange for selling less than 8 percent of their store fronts.

Brazil Indian-farmer standoff intensifies, tribes storm Congress

BRASILIA – Brazilian Indians are trying to derail a congressional proposal to change the way indigenous lands are recognized, intensifying a standoff between the powerful farm sector and a carefully protected minority by literally storming the floor of Congress.

Special Report: Rough justice as Brazil tries to right past wrongs to Indians

MARAIWATSEDE, Brazil – Damião Paridzané was nine years old in 1966 when the Brazilian Air Force loaded him and hundreds of other Xavante Indians onto a cargo plane. | Video

UK-based TMO Renewables building cellulosic fuel plant in Brazil

SAO PAULO – UK-based TMO Renewables said on Friday it plans to build Brazil’s first commercially viable second-generation ethanol plant, betting on the South American country’s need for non-food-based biofuels.

Brazil’s Embraer looks to shock Lockheed with price of cargo jet

RIO DE JANEIRO – Brazilian planemaker Embraer SA is looking to shock rivals with the price of its KC-390 military transport plane when it starts booking firm orders within the next 12 months, according to a senior executive.

Higher volumes and more investment for Brazilian railfreight
INTERNATIONAL RAILWAY JOURNAL – Despite a slowdown in economic growth, Brazil’s freight railways invested nearly Reais 4.9bn ($US 2.4bn) in new infrastructure and equipment last year, a 6.6% increase over 2011,

LATIN AMERICA

British Firms Explore Trade Opportunities in Mexico and Colombia

A four-day trade mission to Mexico and Colombia by medium-sized British businesses took place in March, focusing on high value opportunities in key sectors.

Jamaica’s decades of debt are damaging its future

The latest IMF loan does not ‘rescue’ Jamaica, whose debt must be written off if its people are to take control of their economy

 The Logistics Hub Project and Jamaica’s Development
An ideal location midway between North and South America, in close proximity to the Panama Canal contributes to this advantage. The Panama Canal will be widened by 2015 to accommodate wider ships and Jamaica hopes to capitalise on this by expanding its port facility and affiliated infrastructure spread over four south coast parishes: namely Kingston, St Catherine, Clarendon and St Thomas. An IDB (2010) study on the productivity of the LAC region concluded that “ports and airports are grossly inefficient.

Latin America’s top port faces logistical woes
Santos’ cargo handling volumes made a strong start to 2013, with the port hitting a record high of 7.9 MM tons, up 27 percent year-on-year, according to Santos’ Port Authority CODESP. If the trend continues, the port is expected to close 2013 with total cargo traffic of 109 MM tons, up from 104 MM last year and 97 MM in 2011. But a record soybean harvest this year has clearly overwhelmed its storage and loading capacity. “It seems that our infrastructure can’t cope with the growth in grain production,” said Sergio Mendes, executive director of the Brazilian Cereal Exporters Association (ANEC). Last month, the logistical nightmare reached epic proportions, with a 64-kilometer traffic jam of trucks waiting to unload their soybean cargo outside Santos port. And the port congestion and resulting shipment delays led Sunrise Group, China’s largest soybean importer, to cancel an order to buy 2 MM metric tons of Brazilian soybean.

Latin America’s Largest PV Projects

As of April 1, 2013, 9.8 gigawatts of large-scale PV projects had been announced in Latin America and the Caribbean. Currently, the generating capacity of projects in operation is just 114 megawatts. Of the 9.8 gigawatts’ worth of announced projects, 731 megawatts have signed off-take agreements of some sort (power purchase agreements, feed-in tariff contracts, etc.) and a further 168 megawatts are under construction. These large numbers have generated a lot of hype for various Latin American markets, in particular, for Chile, Mexico, and Brazil.

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Filed under: Banking, Brazil, Central America, Chile, Colombia, Energy & Environment, Latin America, Mexico, Peru, Risk Management, , , , , , , , , , , , , , , , , , , , , , , , ,

Brazil Macro August 2010

According to the IPCA-15 index, inflation was -0.05%. The inflation deceleration process, which was initially characterized by a positive shock of food prices and the seasonal favorable behavior of clothing prices, has gradually become broader and longer than originally thought. The inflation outlook points to IPCA reacceleration down the road, but low current inflation is postponing this scenario. In all, the Selic rate is likely to be maintained stable in the next COPOM meeting.

According to the IPCA-15 index, inflation was -0.05% in the 30 days ended in August,13th. Since the end of June, retail inflation, measured by the IPCA and the IPCA-15 indexes, has remained at a very low level, close to zero, and chances are that this will not change in the short term.

The diffusion index rose slightly to 52.9, from  48.7 in the end of July, showing that a larger percentage of items from the inflation basket has faced price increase. However, diffusion´s moving average is declining (see chart on the right), suggesting that inflation is likely to keep decelerating. Also, there is indeed a growing number of groups of goods or services posting deflation or declining inflation. For instance, according to August´s IPCA-15, food at home, furniture, home appliance, electronics, clothing, footwear, textiles, pharmaceuticals and communications posted deflation. Eating out of home, fuel and energy for housing, health services, personal care and recreation are posting significant lowering inflation.

In sum, the inflation deceleration process, which was initially characterized by a positive shock of food prices and the seasonal favorable behavior of clothing prices, has gradually become broader and longer than originally thought. As a result, 12-month core IPCA and services inflation have begun to drop, which is surprising because the level of capacity utilization is close to a record high, unemployment is at a record low, the aggregate wage bill is rising and there are signs of supply shortage in some sectors.

The inflation outlook points to IPCA reacceleration down the road, because of the underlying economic conditions, the fact that wholesale prices have increased, and the high probability that wage negotiations, scheduled for the following months, will lead to real wage increases above productivity gains. Nevertheless, low current inflation is postponing the IPCA reacceleration scenario and, to be fair, weakening it too, as it helps align inflation expectations with the inflation target. In all, August´s IPCA is likely to be around 0.1% and the monetary policy committee – Copom – seems poised to maintain the Selic rate stable in the next meeting, scheduled for September,1st.

Source: Banif – IXE, 20.08.2010 Mauro Schneider mschneider@banifib.com.br

Filed under: Brazil, Latin America, News, , , , , , , , , ,

China commodities index launched by Jim Rogers, Macquarie

The index tracks changes in the price of a basket of agricultural commodities most commonly consumed in China.

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Macquarie Funds Group and Jim Rogers have joined together to create an agricultural commodities index that reflects changes in food consumption patterns in China.

The Macquarie and Rogers China Agriculture Index is an investable index that tracks changes in the price of a basket of agricultural commodities most commonly consumed in China. Having posted a return of more than 11% for the month of December, the index outperformed most regional equity markets and other agricultural indices. Macquarie Funds, the asset management arm of Australia’s Macquarie Group, is launching the index now that it has a track record of two months since its creation in November.

The index is made of exchange-traded futures contracts on physical commodities that aim to capture the price impact of current and potential changes in China’s food consumption patterns. The index allows investors to keep a daily track on the price changes of the agricultural commodities basket. It also allows fund managers and other providers to issue financial products which are linked to an innovative and topical theme.

“Apart from being the world’s most populous nation, China is one of its fastest growing and as such, Chinese dietary patterns should play an influential role in determining the prices at which agricultural produce is exchanged.’’ says Harry Krkalo, Singapore-based head of retail funds sales for Macquarie Funds in Asia. “Developing an investable index which effectively tracks the price changes of commodities with reference to the quantities of each agricultural product consumed in China is an innovative and exciting way to invest in the sector.”

The index is the first one manufactured in Asia by Macquarie Funds, which is in the process of building its business in the region. As of end-September, the fund house had assets under management of $53 billion worldwide, including $1.5 billion sourced from investors in Asia.

“Macquarie is a leader in trading commodities futures. Jim Rogers has worked with other groups before but nothing specifically with China,” says Krkalo. “So when we put those bullet points down, a Chinese consumption-base product made sense and it is an interesting first index for us to roll out.”

In December last year, most major Asian equity indices including Nikkei 225, Hang Seng, MSCI Singapore, Kospi 200 and MSCI Taiwan posted positive returns, the largest of which was the Kospi 200 with a performance of around 6.2%. Commodities indices outperformed equity markets last month, however, with the Dow Jones-AIG Agriculture Total Return Index and the Macquarie and Rogers China Agriculture Index posting returns of approximately 9.8% and 11.6% respectively.

Macquarie Funds plans to launch, in the near future, a series of funds linked to the Macquarie and Rogers China Agriculture Index in the Asian region in addition to issuance in Switzerland.

“The investing public is still worried about where to put their money so any product launch for the next six months is going to be a carefully thought-out launch,” Krkalo says. “But this commodities index is interesting for both short-term and long-term reasons.”

Agriculture commodities have been sold off too heavily considering the demand for these goods, Krkalo says. The short-term opportunity stems from attractive valuations and, in the long-term, this asset class is expected to add value to investors’ portfolios, he adds.

Commodity tracking indices have generally been calculated based on supply side factors and commodity weightings are based on the global production. The Macquarie and Rogers China Agriculture Index is unique in the sense that component weightings are determined using actual and forecast data on consumption in China.

“Macquarie is one of the largest traders of agricultural commodities globally and Jim Rogers is one of the world’s leading commodity investors so it’s a great partnership,” says Matthew Long, Sydney-based executive director of Macquarie Funds.

Indeed, Rogers – who founded Quantum Fund with George Soros in 1970 and is now an independent investor – is best known these days for being a long time bull on China and commodities.

“I bought more (commodities) recently. I know that one of the few bull markets that I can see going up in the next five to 10 years is in agriculture,” says Singapore-based Rogers. “You may not have bull markets in cars or financial institutions or lots of other things but I know the world is not going to stop eating.”

After watching commodities markets suffer broad-based and drastic selling for most of the second half of 2008, a committee made up of Rogers and the treasury and commodities team in Macquarie Funds created the index, which went live in November.

“The index methodology is a refreshing way to approach investing in commodities and over time we believe that consumption patterns, particularly those of China, will increasingly influence agricultural prices. We expect the index to perform quite differently from existing agricultural indices,” Long adds.

The top three commodities in the index in terms of weightings are wheat, corn and soybean. The rest are coffee, cocoa, sugar, rice, palm oil, rubber, orange juice, soybean meal, soybean oil, cotton, canola and milk.

The Index incorporates the spot return of the underlying commodity contracts plus the discount or premium obtained by rolling over the contracts as they approach delivery. It is calculated on both an excess return and total return basis. Index constituents and weightings are potentially re-assigned annually and intra-annually in exceptional circumstances to account for current and potential future changes in China’s consumption patterns.

Source: AsianInvestor

Filed under: Australia, China, Energy & Environment, News, Risk Management, , , , , , ,