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Brazil: BM&FBOVESPA News August 2011 Nr 29

BM&FBOVESPA International Financial and Capital Markets Conference features Robert Skidelsky and Michael Pettis

The biennial meeting held as of Thursday (August 25) in the town of Campos do Jordão in the state of São Paulo will host debates on current economic and global financial market issues, including challenges for the derivatives and capital markets, the future of financial intermediation, and algorithmic trading strategies. BM&FBOVESPA Chief Executive Officer Edemir Pinto and Chairman of the Board of Directors Arminio Fraga will receive, for lectures and debates, some of the world’s most influential experts about the matters on the agenda. Among their number are Robert Skidelsky, Emeritus Professor of Political Economy at the University of Warwick, and a specialist on the work of the economist John Maynard Keynes. Michael Pettis, a professor at Peking University’s Guanghua School of Management and expert on the Asian markets will take part in a discussion about the challenges that the Brazil-China relationship will face over the coming years.

> Full agenda of the event

BM&FBOVESPA launches eight new currency derivatives

BM&FBOVESPA launched eight new currency futures contracts this week (August, 15). They are six futures contracts and two mini futures contracts. The regular futures contracts are for the Brazilian Real against the South African Rand (ZAR), Turkish Lira (TRY), New Zealand Dollar (NZD), Chilean Peso (CLP), Chinese Yuan (CNY) and Swiss Franc (CHF). The contracts will be authorized for trading as of the September 2011 maturity, between 9:00 a.m. and 6:00 p.m. Each futures contract is sized and formatted so that it is equivalent to the USD 50,000 size of U.S. Dollar futures contract. The sizes of the respective contracts are 350,000 South African Rands; 350,000 Chinese Yuan; 75,000 Turkish Lira; 75,000 New Zealand Dollars; 50,000 Swiss Francs; and 25 million Chilean Pesos. The Mini U.S. Dollar Futures Contract (WDO) is sized USD 10,000, which represents 20% of the size of the regular U.S. Dollar Futures Contract. The Mini Euro Futures Contract (WEU) is sized €10,000, representing 20% of the size of the regular Euro Futures Contract .

> More info

International partnerships mark the expansion of the BM&FBOVESPA Institute of Education

The BM&FBOVESPA Institute of Education has been known as the “Escola para os Mercados Financeiro, de Capitais e de Derivativos” (Financial, Capital and Derivatives Markets School) since its foundation in 1986. Growing demand for professional training, however, means it has broadened its scope since 2010 and it has also begun operating as the “Escola do Investidor” (School of the Investor) and the “Escola de Empresas e Empreendedores” (Enterprises and Entrepreneurs’ School). In the first half of 2011 the Institute of Education signed cooperation agreements with internationally renowned business schools, among which the Endeavor Institute, Babson College and Chicago Booth:

  • Endeavor Institute – the “Bota pra fazer” (Sow to Reap) program of courses aimed at startup companies, in business incubators. This methodology was developed by Endeavor Brazil in partnership with the Kauffman Foundation. The Institute of Education was the first institution in Brazil to apply this methodology for qualifying entrepreneurs.
  • Babson College – Through this partnership, the BM&FBOVESPA Institute of Education offers the “Gestão e Crescimento Empresarial de Alto Impacto” (High Impact Business Management and Growth) program of courses, hand-tailored to enable Brazilian entrepreneurs to lead their companies’ growth. The second group begins in October this year.
  • Chicago Booth – The business school of the University of Chicago. This partnership has resulted in the development of a three-module academic program, focused on the capital and derivatives markets and with an international approach.  Next course in December.

BM&FBOVESPA’s options and capital raising activity

According to the World Federation of Exchanges (WFE) BM&FBOVESPA is ranked as #1 in volume of Equity Option trades and #4 (Capital Raised) in terms of newly listed companies (IPOs). These and other regulated exchange industry numbers are available at:

Market Makers for Options on the Stock of BM&FBOVESPA, Usiminas and BOVESPA Index

BM&FBOVESPA announced on August 3 the start of the selection process for up to three market makers for options on the stock of BM&FBOVESPA S.A (BVMF3) and Usinas Siderúrgicas de Minas Gerais S.A. – Usiminas (USIM5) and for options on the BOVESPA Index (IBOV). This is the second stage of the Bidding Program to select market makers in equity options and BOVESPA Index options, developed by the Exchange. Institutions that are interested in taking part – including nonresidents – have until September 26, 2011 to deliver proposals. The winners will be announced on October 11, 2011.

> More information about the Market Makers for Options

Bradesco wins BM&FBOVESPA selection process as Depositary Institution for 10 Unsponsored Level I BDR Programs

Bradesco has won the sixth selection process for depositary institutions authorized to request registration for trading 10 Unsponsored Level I Brazilian Depository Receipt (BDR) programs, backed by shares issued by publicly traded companies with headquarters overseas. Bradesco should simultaneously present BM&FBOVESPA and the Brazilian Securities and Exchange Commission (CVM), within 60 calendar days, with the necessary documentation for submission to register the 10 Unsponsored Level 1 BDR programs. The programs should include foreign companies that do not yet have BDRs traded on BM&FBOVESPA and which are headquartered in the United States and listed on U.S. stock exchanges.

There are currently 30 Unsponsored Level 1 BDR programs available for trading on BM&FBOVESPA, which have Deutsche Bank S.A., Citibank DTVM S.A. and Itaú Unibanco S.A. as their depositary institutions. Another three lots of ten programs shall be presented to the market soon by Banco Bradesco S.A., Citibank DTVM S.A. and Deutsche Bank S.A.

> More info

Up to USD 10 billion in public offerings and follow-ons in 2011

In the year to August 15, BM&FBOVESPA registered USD 10.1 billion in public offerings and follow-ons. There were eleven Initial Public Offerings (IPOs) in 2011: AREZZO&CO (ARZZ3), SIERRA BRASIL (SSBR3), AUTOMETAL (AUTM3), QGEP PART (QGEP3), IMC HOLDING (IMCH3), TIME FOR FUN (SHOW3), MAGAZINE LUIZA (MGLU3), BR PHARMA (BPHA3), QUALICORP (QUAL3), TECHNOS (TECN3) and ABRIL EDUCAÇÃO (ABRE11). At the end of July, the 181 companies that are part of the BM&FBOVESPA’s special corporate governance levels represented 64.96% of market capitalization, 79.04% of financial volume, and 76.84% of trades in the spot market. At the end of June, there were 177 companies, representing 65.56% of market capitalization, 75.42% of financial volume, and 77.57% of spot market trades.

Number of ETF trades grows 25% from June

The financial volume registered in July by the eight BM&FBOVESPA Exchange-Traded Funds (ETFs) reached BRL 667.75 million in 31,997 trades, from BRL 598.43 million and 25,701 the previous month. In July the ETF with the highest financial volume was BOVA11 with BRL 573.83 million and 26,915 transactions.


BM&FBOVESPA 5th International Financial and Capital Markets Conference

The city of Campos do Jordão will once again be the site of one of the year’s most important financial market events, hosted by BM&FBOVESPA. The 5th edition of the International Financial and Capital Markets Conference will have national and international guest speakers, round-table discussions, social activities and an exhibition area providing an excellent venue for participants to debate some of the most significant financial topics. Speakers include: Maria Helena Santana (Securities and Exchanges Commission of Brazil – CVM), Robert Engle (2003 Nobel Prize), Joe Gawronski (COO of Rosenblatt Securities) and Ilan Goldfajn (Chief Economist, Itau Unibanco).

Location: Campos do Jordão, SP, Brazil
Date: August 25-27, 2011

> Full agenda of the event

*Nonresident investors can apply for an exclusive 50% discount for registration at the event. Please contact the International Business Development team to request your coupon, by email to or


BM&FBOVESPA will exhibit at FIA EXPO 2011. The event attracts approximately 5,000 people from more than 30 countries, from senior staff at brokerage firms and exchanges, to floor traders, pension fund managers, corporate treasurers, CTAs and CPOs, and individual investors. BM&FBOVESPA staff will present the Exchange’s products, connectivity, DMA access via Globlex, etc.

Location: Hilton Chicago, USA
Date: October 10-12, 2011

> More info

Family Office Summit – Latin America

BM&FBOVESPA is currently sending invitations for this event promoted by the World Research Group and which will be held in São Paulo September 26-28. A BM&FBOVESPA representative is scheduled to talk about alternative investments. The summit will present current Trends for Optimizing Effective Strategies and Alternative Methods to Produce Investments for Single and Multi Family Offices in the Brazilian capital market. There will be a special networking session bringing together managers, single and multi family offices, advisors and consultants.

Location: Intercontinental São Paulo – Alameda Santos, 1123, São Paulo , SP.
Date: September 26-28, 2011.

> Full Agenda and Registration

2nd FX Growth Markets Series: Brazil – Profit & Loss

BM&FBOVESPA will join the Profit & Loss FX Growth Markets conference on October 20, 2011 at the Tivoli Hotel in São Paulo. Profit & Loss has been operating its highly successful series of Forex Network and FX Growth Markets conferences for more than 10 years, with regular annual events held in London, New York, Chicago, Singapore, Brazil, Mexico, Colombia, Chile, Shanghai and Toronto, and comes to Brazil for the second time. A BM&FBOVESPA representative will talk at the event.

Location: Tivoli Hotel São Paulo, São Paulo, Brazil
Date: October 20, 2011.

> Full Agenda

Volumes and trades by Direct Market Access (DMA)

BM&F Segment
In July, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 20,009,841 contracts traded and 2,417,398 trades. In June, the volume reached 20,409,252 contracts traded and 2,105,981 trades.

The volumes registered by each access modality in the BM&F segment were as follows:

  • Traditional DMA – 7,440,774 contracts traded, in 797,002 trades, in comparison to 8,168,492 contracts and 775,388 trades in June;
  • Via DMA provider (including orders routed via the Globex System) – 7,040,432 contracts traded, in 258,881 trades, compared to 7,365,306 contracts and 260,441 trades in June;
  • DMA via direct connection – 3,691 contracts traded in 977 trades, against 8,995 contracts and 1,376 trades in June;
  • DMA via co-location – 5,524,944 contracts traded, in 1,360,538 trades, compared to 4,866,459 contracts and 1,068,766 trades in June.

In July, transactions carried out by foreign investors presented by CME to BVMF (who use the Globex-GTS order routing system or access BVMF markets via co-location) totaled 2,897,744 contracts traded, in 688,862 trades, compared to 2,658,361 contracts and 623,653 trades in June.

In July, order routing via DMA in the BOVESPA* segment totaled BRL 95,030,778,000.00 and 11,225,193 trades, from BRL 88,977,494,000.00 and 10,244,578 trades the previous month.

Trading volumes per type of DMA in the BOVESPA segment:

  • Traditional DMA – Volume of BRL 87,674,861,000.00 and 10,091,956 trades from BRL 82,843,187,000.00 and 9,287,652 in June;
  • DMA via co-location – Volume of BRL 6,381,361,000.00 and 1,007,081 trades from BRL 5,206,388,000.00 and 856,246 in June;
  • DMA via provider – Volume of BRL 974,556,000.00 and 126,156 trades from BRL 927,919,000.00 and 100,680 in June.

* Direct access to the BM&FBOVESPA market segments is carried out through DMA models 1, 2, 3 and 4. In model 1 or traditional DMA, the client accesses the GTS or Mega Bolsa through technological intermediation of a brokerage house. In model 2 or via DMA provider, the client does not use the technological intermediation of a brokerage house, but rather connects to the system through an authorized access provider. DMA via order routing with CME Globex is also a form of DMA model 2. In model 3, the client connects to the system through a direct connection. In model 4 or via co-location, the client installs its own computer within the Exchange’s facilities. 


The volumes registered by access modality include both buy and sell sides of a trade.

The volumes by access modality for both the BM&F and the BOVESPA market segments have been reported in a consolidated manner in the BM&FBOVESPA statements since May 2009.


BM&F Segment July 2011

In July, derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 44,199,125 contracts and BRL 3.35 trillion in volume, compared to 51,023,956 contracts and BRL 3.25 trillion in June. The daily average of contracts traded in the derivatives markets in July was 2,104,720, in contrast to 2,429,712 in June.

BOVESPA Segment July 2011

In July 2011, equity markets (BOVESPA segment) traded BRL 119.63 billion, in 11,016,993 trades, with daily averages of BRL 5.69 billion and 524,619 trades, in comparison to June when total volume reached BRL 124.19 billion, in 10,187,883 trades, with daily averages of BRL 5.91 billion and 485,137 trades.

Filed under: BM&FBOVESPA, Brazil, China, Events, Exchanges, News, Risk Management, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

Mexico Credit: Banorte beats Brazil´s Itau as acquisition boosts lending

Bonds sold by Grupo Financiero Banorte SAB, Mexico’s fourth-largest bank by outstanding loans, are outperforming debt from financial peers in Latin America after an acquisition helped the company boost lending by 29 percent.

The 6.1 percent rally in Banorte’s dollar bonds due in 2021 this year compares with an advance of 5.7 percent for bank debt in the region, according to data compiled by Bloomberg and Credit Suisse Group AG. Similar-maturity bonds sold by Banco Itau Unibanco SA, Latin America’s biggest bank by market value, gained 6 percent during the same period. Debt due in 2020 issued by Bancolombia SA, Colombia’s biggest bank, rose 5.5 percent.

Banorte, based in Monterrey, Mexico, is tapping into a growing demand for credit in Latin America’s second-biggest economy. Total loans for Banorte expanded 18 percent in the past year, the most since 2008, according to Mexico’s National Banking and Securities Commission. Banorte said on July 25 that its acquisition of Ixe Grupo Financiero SAB helped increase its loan portfolio to 312 billion pesos ($26.4 billion) in the second quarter from 242 billion a year earlier.

“They grew at a healthy pace in the quarter and I’m expecting it to continue,” Natalia Corfield, an ING analyst who recommends investors buy Banorte’s bonds, said in a telephone interview from New York. “The banking sector has a very good growth potential.”

The yield on Banorte’s bonds sank 47 basis points, or 0.47 percentage point, this year to 4.72 percent, according to data compiled by Bloomberg. Mexican government dollar notes that mature in 2020 yield 3.45 percent.

Credit Expansion

Pedro Rodriguez, a spokesman for Banorte, didn’t return a phone message seeking comment.

Yields on Sao Paulo-based Itau’s bonds due in 2020 fell 41 basis points during the same period to 5.39 percent. Itau declined to comment through an e-mailed statement.

Mexican banks including Banorte are benefiting from the expansion of credit to a larger share of the population, said Alonso Madero, who helps manage about $5.5 billion in debt at Corp. Actinver SAB. The country’s private credit measured as a percentage of the gross domestic product was 21.8 percent in 2009, compared with 45 percent in Brazil, according to ING.

“Banks could lend a lot more,” Madero said in a telephone interview from Mexico City, “It’s very clear that this is how they could grow. There’s a big potential growth to capitalize on because of the low banking penetration.”

Growth Outlook

Banks in Mexico are increasing lending as the economy may grow “a little bit more” than 4.3 percent this year, Finance Minister Ernesto Cordero said in an event in Mexico City yesterday. Gross domestic product expanded 5.4 percent in 2010, the most in a decade.

Slowing growth in the U.S., the destination for 80 percent of Mexico’s exports, may curb demand for credit in the Latin American country, said Araceli Espinosa, debt analyst at Scotia Capital.

A report yesterday showed that service industries in the U.S. expanded in July at the slowest pace in 17 months as orders and employment cooled, indicating the biggest part of the economy had little spark to begin the second half of the year. Economic figures in the U.S. in last two weeks have shown declining home sales, weaker factory orders, waning consumer confidence and the first decrease in household spending in two years.

“If the economy is not growing, the loan portfolio for the banks is not going to grow,” Espinosa said in a telephone interview from Mexico City.

Yield Spread

Yields on futures contracts for the 28-day TIIE interbank rate due in May were unchanged at 4.99 percent, indicating traders expect the central bank will wait until that month to raise benchmark borrowing costs from a record low 4.5 percent.

The extra yield investors demand to hold Mexican government dollar bonds instead of U.S. Treasuries was unchanged at 128, according to JPMorgan Chase & Co.

The cost to protect Mexican debt against non-payment for five years rose 1 basis point to 112, according to CMA. Credit- default swaps pay the buyer face value in exchange for the underlying securities or cash equivalent if the issuer fails to comply with debt agreements.

The peso advanced 0.2 percent to 11.8193 per dollar, extending its advance this year to 4.4 percent.

Banorte is likely to exercise a call option on its bonds in 2016, ING’s Corfield said. The yield to the 2016 call date on the company’s notes may drop 50 basis points from 6 percent yesterday, she said. A call is a contract that gives the holder the right to buy a security at a set price within a set period. The holder of the call is not obligated to buy the security.

‘Well Positioned’

Banorte has used takeovers, including the 2001 acquisition of Bancrecer SA, to grow into a national financial group from a north-Mexican regional lender since the country’s banking industry collapse in 1995.

Banorte reported a 24 percent increase in second-quarter net income to 2.05 billion pesos. Ixe added 119 million pesos to the profit.

“It’s a benign environment for Mexico now and Banorte is well positioned to benefit from it,” Corfield said.

Source: Bloomberg, 04.08.2011 by  Veronica Navarro Espinosa; Andres R. Martinz

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

China: BlackRock – Can China´s Saver save the world?

  • China has experienced rapid credit-led growth in recent years. This growth has been an important contributor to global economic recovery.
  •  Many commentators anticipate that the rapid nature of Chinese credit growth, allied to a capital allocation process led by political direction and undertaken at highly subsidized rates of interest, will inevitably end in a credit bust.
  •  Further, these critics point to the opaque nature of China’s banking system, rapidly growing off-balance-sheet exposures and an overblown real estate sector as evidence of a fragile Sino financial system overdue for a crisis that will, in turn, cripple world growth and extended financial systems elsewhere.
  •  While we are sympathetic to much of the logic behind these fears, we believe that these concerns float on some flimsy analysis. As one example, we cite the mismatch between the oft-cited story of 65 million empty apartments nationwide in China and the inconvenient truth that market estimates indicate that only 60 million apartments have been completed in the last decade.
  •  More importantly, we believe that the “panda bears” overlook the fact that much of the expansion in China’s financial balance sheet has been quasi-fiscal lending and that such lending is backed and guaranteed by a system that is experiencing rapid growth in income and starting from a low level of overall debt.
  • Domestic savings rates are high — indeed, excessive at over 50% of GDP. While external capital has funded much of the rise in banking system liabilities over the last 12 months, China also runs a current account surplus, is largely domestically funded and lacks many of the vulnerabilities that undid Western credit systems in 2007–08.
  •  We agree that bad debt levels in China will rise — in fact, in a worst-case scenario, there could be as much as 7 trillion RMB of bad loans in the system at present, according to our estimates. But bank balance sheets are strong, profit growth is subsidized by fixed lending and deposit rates, and economic growth itself should be strong enough to absorb most reasonable estimates of losses without serious challenges to financial system stability.
  •  Bank deposits are the main source of domestic savings. We are confident that Beijing will seek to avoid social discontent arising from any threat to the security of deposits with vigor and resources that would make Western bailouts appear puny by comparison. Our concern is that savings growth rates will slow over the next few years and that deposit growth will be much more pedestrian than over the last decade. The recent consolidation of data on funding growth under the banner of Total Social Financing (TSF) presents a clearer picture of the efficiency of deposit mobilization in funding growth. Even allowing for shortcomings in methodology, the incremental growth per unit of financing — Financial Incremental Capital Output Ratio, or FICOR, as we term it — has deteriorated over the last decade.
  •  As a consequence of slower savings rates and reduced FICOR, we expect a slowdown in trend growth over the next few years to 7-8% rather than the 8-10% level of recent times. State-led capital allocation and rate fixing was a feature of both Korea and Japan in the past. In both cases, financial crisis arising from this policy mix was triggered by financial reform. We believe the same holds for China, but will take a number of years to unfold.

Read full report Can China´s Savers save the world

Source: BlackRock / Carral Sierra, 12.07.2011

Filed under: China, Market Data, Risk Management, , , , , , , , , , , , , , ,

China: BlackRock – Puede el ahorro de China salvar al mundo?

China ha experimentado en años recientes un rápido crecimiento impulsado por el crédito, el cual ha sido un factor importante en la recuperación económica global. Sin embargo:

  • Muchos analistas anticipan que la rápida condición del crecimiento chino gracias al crédito, junto con un proceso de distribución de capital dirigido por sus políticos y emprendido a tasas de interés altamente subsidiadas, inevitablemente derivará en una caída crediticia.
  • Estos comentarios señalan la naturaleza opaca del sistema bancario de China, una rápida exposición de las hojas de balance y un sector inmobiliario inflado, como la evidencia de un sistema financiero frágil susceptible a una crisis que, a su vez, afectará el crecimiento mundial y a otros sistemas financieros.

    Opiniones del BlackRock Investment Institute: ¿Puede el Ahorro de China Salvar al Mundo?

  • En la nueva publicación del BlackRock Investment Institute, “¿Puede el ahorro de China salvar al mundo? (Can China Savers Save the World?)”, los autores analizan las razones que están en la base de estos temores. Al respecto, afirman que esta inquietud podría estar basada en un análisis débil.
  • Asimismo, creen que los llamados “pandas” no consideran el hecho de que gran parte de la expansión de la balanza financiera de China se ha basado en préstamos casi fiscales y que tienen el respaldo y garantía de un sistema que experimenta un rápido crecimiento de su ingreso y cuenta con un nivel bajo de deuda.
  • En consecuencia, los autores sugieren que China no sufrirá un colapso financiero, sino a lo sumo un descenso en su potencial y en su tasa de crecimiento.

Adjunto te hacemos llegar el documento completo en inglés en formato PDF. En caso de cualquier duda adicional, quedamos a tu disposición.

Para leer el reporte completo click aqui.  Can China´s Savers save the world

Source: Black Rock / Carral Sierra, 12.07.2011

Filed under: China, News, Risk Management, , , , , , , , , , , , , ,

FT Special Report: Investing in Mexico

Read the FT Special Report at Investing in Mexico FT Special Report June 2011


Boom times despite safety fears

There has been a rise in violent crime in some areas, but the country is still a good place for business, says John Paul Rathbone

Better government and smarter leadership, combined with strategic vision, could change Mexico very swiftly, writes Luis Rubio

Regulation: Media wars give hope of more choice

Competition, once an infrequent and timid visitor, is making a loud return, says Adam Thomson

Politics: Reform on hold as all eyes turn to elections

The PRI is tipped to regain the presidency but it is not all plain sailing, writes Adam Thomson

Industry: Aerospace sector helps high-tech economy fly

Advanced manufacturing skills are boosting exports, writes Adam Thomson

US relationship: Bumps on road to better links

Differences persist on guns, drugs and illegal migrants, says Anna Fifield

Still everything to play for in face-off with BrazilJohn Authers considers the nation’s rivalry with Brazil and asks whether there is all still to play

Stock market: Changes give vigour to once-somnolent bourse

Technical and other alterations facilitate business, reports Adam Thomson

Tourism: Aggressive push to promote country’s multifaceted allure

The nation’s tourism industry is working hard to persuade visitors there is more to discover, writes Adam Thomson

Mexico City: Conditions improve for business

A string of liberal social reforms during the past few years has led some observers to rename Mexico’s capital ‘Marcelona’, writes Adam Thomson

FT Special Report, 13.07.2011

Filed under: BMV - Mexico, Brazil, Library, Mexico, News, Risk Management, , , , , , , , , , , , , , , , , , , , , ,

Brazil: Greek accord might buy some peaceful time – Monthly Allocation July 2011 – BANIF

Greek accord might buy some peaceful time

We maintain our negative view on the international market for July. In the US, after a series of weak economic indicators, even worse than initially expected, there is no evidence of a turnaround in the short term, especially while the unemployment rate remains at high levels. The ongoing recovery in Japan, together with a slight reduction in commodity prices and the slight reduction in US interest rates (10-yr bonds) seem to us to be a base for some economic recovery that to date has not yet materialized. We believe that potentially increasing inflation might stress the Chinese market, but this possibility remains uncertain for the moment. In the Euro zone, economic indicators tend to play a secondary role to political tension, as the outcome for the Greek debt remains undefined. The recent measures approved by the parliament enabled only the receipt of a tranche of aid previously negotiated. We expect a temporary ease in this tension, which might pick up shortly as it negotiates a second aid package by September, under uncertain political support from all European countries. The dominant feeling is that Greece has no orthodox solution while it remains under the Euro umbrella and tied to its rules. The biggest fear, however, is not of Greece defaulting, but that it would spread the problem to other countries also on the list of troubled economies.

Despite our negative view for international markets, we believe that July may be less negative than June was, mainly due to the temporary ease that the Greek accord brought. However, tensions should increase with the negotiations for the next agreement, expected by September.

Local inflation likely to continue low

Inflation in July might continue low, although not as low as in June, which confirmed and even surpassed the most optimistic expectations. While in June inflation was slightly negative (according to some of the main indexes), consensus expectations for the IPCA in July are around 0.15-0.20%. This reduction was a result of seasonal factors that might lose effect shortly, with inflation likely to pick up as they do.

Delinquency rates increased slightly in June, but we tend to believe this is not a source of concern because: 1) personal income is likely to show improved figures because of the recently reduced inflation and 2) the amount of late payments, the step before writing off debt, decreased for two months in a row.

We predicted that June’s local positive sentiment based on reduced inflation would overcome a bad international scenario, but this did not materialize. We continue with the same views for July, bad internationally and good locally. This time, however, we believe that the negative mood might continue to prevail.

We changed our portfolio to be more defensive, having in mind our somewhat negative view for the market. We have added Tractebel and Telesp (both with 5% stake), two traditionally defensive names, we reduced weight on Even (from 10% to 5%) and have withdrawn Itaú.

Source: BANIF CVC, 01.07.2011

Filed under: BM&FBOVESPA, Brazil, China, News, , , , , , , , , , , ,

VAM: Vietnam Market Analysis May 2011

Interest rates the highlight of the month
With the aim of controlling inflation, the SBV tightened money supply, thereby increasing interest rates. Market interest rates are now averaging 19.86% for short term borrowing, and if including fees (which banks apply to get around the lending rate cap) the effective borrowing costs increased to 23%. On the other hand, the US$ cost of borrowing (approximately 3%) and the rate paid by SOEs is actually negative in real terms, due to a two-tier lending rate. Rates at these prohibitive levels in the private sector threaten to choke off any growth for the year; despite this, another 100 bps interest rate hike for the year is still a possibility.
Following Aprils introduction of USD-denominated deposit cap of 3% for individuals, domestic residents attracted by the large gap between USD and VDN deposit rates, opted to keep fewer dollar deposits, thereby contributing to 2.89% MoM decline in USD-denominated deposits. VND-denominated deposits increased by 1.27%. No slowdown in credit growth, as seen by M2 levels, is yet visible. With credit growth reaching 6.5% year-to-date (as of April), the annual target credit growth rate of 16  18% will likely be overshot. The SBV lifted Open Market Operations repo rates 100 bps to 15%, thus sending a message that tight monetary conditions will remain.
Inflation still very much a concern
Nationwide CPI rose 2.21% MoM (2.1% when seasonally adjusted) with the first five months of 2011 reaching 12.07%. Inflation in May continued to accelerate, approaching levels not seen since 2008 with no signs of easing. Three months into a shift in focus from growth to curbing inflation, monetary authorities have used both fiscal and monetary tools, tightening aggressively, yet little impact is invisible. Seasonally adjusted food prices were up 3% MoM in May, following a 3.8% increase in April. Prices in food and energy related items were most noticeably up, however, it should be noted that this was aided by double digit hikes in electricity and fuel prices in late February and later March. It is likely that inflation will surpass 20% in the coming months and further monetary tightening is to be expected.
Stability in the dong continues
Stability in the VND/USD exchange rate continued into the month of May. With the dong appreciating about 0.43% over the previous month, banks appear to have sufficient USD dollar supplies to meet importers needs. Although exact figures are difficult to come by, recent media reports have quoted a government minister as saying that reserves stood at $10bn (the equivalent to about 6 weeks of imports) in December 2010. Towards the end of May, the central bank announced that it has purchased USD 1.2bn with the aim of increasing international reserves. In this quest, the SBV outbid the market by 40  50 dong, to VND 20,600 per USD, indicating it exercises caution while added to reserves by striving to avoid furthering inflation through increased liquidity. 
Domestic indicators continued to show positive signals
Domestic indicators such as growth in exports and imports both continued to show increases for the month however, growth came at a decreasing pace than in April. Exports and imports, increased at 5.7% and 2.7% respectively for May. While Mays trade deficit came to US$1.7bn, the highest in 18 months, the drop in commodity export growth rates was a contributing factor. Domestic consumption remains strong with industrial production expanding by 14.4% YoY and retail sales growing by 23.7% YoY, FDI, overseas remittances and aid money remain important sources of exchange for Vietnam to offset its trade deficit. FDI figures for the first 5 months of the year totaled $4.7bn, or about 23.5% of the years target.
Equity markets 
Starting the month after a long holiday weekend, the VN-Index opened at 483.3 points and ended the month at 421.37, representing a 12.23% loss MoM. The VN-Index even plummeted to 386.36 points on 23 May 2011, its lowest level since 2009. May also saw dramatic downward trend in trading volume anda squeeze on liquidity on both bourses. Trading values for both bourses fell for yet another month, dropping to $27 million in May, down from $62 million and $42 million in March and April, respectively.
The massive sell-off from retail and even institutional investors resulted from investors low confidence which in turn was caused by the upward revision of inflation forecast and “persistently high interest rate”. Moreover, news about the banks deadline to reduce real-estate and non production loans to below 20% of total loans also ignited fears of margin calls and forced selling to recover bad debts on the banks part, leading to a 10 consecutive bear sessions on the market in spite of a strong rebound after hitting the record 2 year low bottom. Further contributing to downward pressure was many investors needing to meet margin calls by liquidating holdings at limit down prices in a period of low liquidity. The trading band further fueled negative sentiment by preventing the market from finding its true equilibrium.
Rounding out the month, the market saw an upturn with several large caps closing limit up. Many investors are abstaining from the market, choosing instead bank fixed term deposits as high bank interest rates provide a profitable, safe alternative.
To better reflect the true sentiment in the market, a senior official has called for the introduction of new indices. While the composition of the indices is yet to be determined, suggestions range from top 30 or top 50 large-market cap companies or dividing the market into business sectors. The poor equity market performance shows macroeconomic factors continue to impede recovery and outlook remains bearish.
Our ViewWe believe the market will continue to fluctuate within the wider range of the trading band in the short-term as investors key concerns, namely double-digit inflation and trade deficit are still prevalent. Economic recovery seems a distant prospect, and investors prefer the high fixed deposit rate to equity at this time. However, in term of valuations, we think Vietnamese equities are currently priced more cheaply than those of other regional markets.
In response to poor market sentiment, the Ministry of Finance recently announced their support to recover the equity market by allowing (1) investors to use more than one brokers; and (2) buying and selling the same securities within a trading day provided that investors securities for sales are available in their depository accounts, with effect from 1st August 2011. This news is considered good catalyst to regain the capital inflow into the system despite the current market instability. For investors with a medium- to long-term outlook, the current poor market is a great opportunity to increase their equity holdings at cheap valuations.  We maintain our picks of telecommunication, consumers and energy sectors with focus on strong fundamental resilient companies with little or no debts as most companies in the other industries are struggling hard with the high-interest rate environment.
Source:VAM, 14.06.2011

Filed under: News, Risk Management, Vietnam, , , , , , , , ,

Brazil – Low Inflation to Boost Brazilian Stock Market – Monthly Allocation – June 2011 -BANIF

At best, things should be as bad as predicted

For multiple reasons, we have a negative view on the international market for June. 1) There is evidence of a slowdown in the US economy. 2) In the Euro Zone, following the relatively well made financial aid package for Portugal, the Greek debt problem has become more acute, with evidence of fiscal targets not met and a lack of political will to implement further measures. 3) China has displayed signs of an economic slowdown after strong 1Q figures.

Despite this negative view, we believe in a mild negative evolution of the markets, with no large factors to cause major changes. The market has revised estimates for economic activity downwards and now, in a best-case scenario, we believe in a reality as bad as predicted. The most important single issue to monitor is probably the evolution of the Greek problem, which disruption we believe is certain and dependent on a strengthening of the European financial market to absorb its impact; a condition not yet achieved. A meeting with European leaders will take place on June 24, which might be a catalyst if an announcement of any decision to favor the short term solution for the Greek difficulties occurs.

Local inflation estimates approach zero

Most estimates for June’s inflation are nearing zero. The Top Five survey, for instance, now has 0.06% for the IPCA index. Considering that the reduction is sharp, coming from monthly levels from around 0.8% to near zero (May figure is likely to remain above halfway between one end and the other), we believe that there is still some skepticism in the market of this downward course. With the release of hard data confirming the expectation of low inflation, available around the third week of the month in the form of the previous release of indexes for June, we foresee an increased optimism driving the market prices up.

We believe a materialization of the positive local scenario we predict will have greater influence on the local market than the dimmer international scenario, leading to a rebound in local prices. As inflation has been the most important economic factor monitored, an ease in its pace would cause a wave of optimism.

Having this positive view in mind, we left our previous cautious stance and, to benefit from a rebound in the local stock market, changed our suggested portfolio significantly. We added Copasa and Itau (5% weight each) and increased the weights on Even, Eztec, and Lojas Renner (all from 5% to 10%). Additionally, we withdrew Telesp, Tiete and Tractebel.

Source: BANIF CVC, 01.06.2011

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

ETF Industry Highlights – April 2011 – BlackRock

Global ETF and ETP industry:

Record April net inflows with US$25.3 Bn.

Record YTD net inflows in the first four months with US$67.2 Bn through the end of April 2011.

The global ETF industry had 2,670 ETFs with 6,021 listings and assets of US$1,469.8 Bn, from 140 providers on 48 exchanges around the world at the end of April 2011. This compares to 2,189 ETFs with 4,354 listings and assets of US$1,113.1 Bn from 122 providers on 42 exchanges, at the end of April 2010.

The global ETF and ETP industry combined, had 3,819 products with 7,893 listings, assets of US$1,670.9 Bn from 176 providers on 52 exchanges around the world. This compares to 2,967 products with 5,453 listings, assets of US$1,295.1 Bn from 150 providers on 44 exchanges, at the end of April 2010.

United States ETF and ETP industry:

Record April net inflows with US$22.4 Bn.
Record YTD net inflows in the first four months with US$51.5 Bn through the end of April 2011.
The ETF industry in the United States had 972 ETFs and assets of US$997.3 Bn, from 29 providers on two exchanges at the end of April 2011. This compares to 839 ETFs and assets of US$764.0 Bn, from 28 providers on two exchanges at the end of April 2010.
US$22.4 Bn of net new assets went into United States listed ETFs/ETPs in April 2011. US$16.7 Bn net inflows went into equity ETFs/ETPs, of which US$9.8 Bn went into ETFs/ETPs tracking US equity indices and US$3.5 Bn went into ETFs/ETPs tracking emerging markets equity indices. Fixed income ETFs/ETPs saw net inflows of US$2.9 Bn, of which US$0.7 Bn went into corporate bond ETFs/ETPs and US$0.6 Bn went into Government bond ETFs/ETPs. Commodity ETFs/ETPs saw net inflows of US$1.8 Bn, of which US$2.4 Bn went into ETFs/ETPs providing exposure to precious metals, while ETFs/ETPs providing exposure to energy experienced US$0.9 Bn net outflows in April 2011.
Of the US$45.5 Bn of net new assets in United States listed ETFs in April 2011, Vanguard gathered the largest net inflows with US$13.2 Bn, followed by iShares with US$12.7 Bn net inflows, while Bank of New York had the largest net outflows with US$1.4 Bn in 2011 YTD.

European ETF and ETP industry:

The European ETF industry had 1,128 ETFs with 3,952 listings and assets of US$328.2 Bn, from 39 providers on 23 exchanges at the end of April 2011. This compares to 932 ETFs with 2,748 listings and assets of US$234.3 Bn from 36 providers on 18 exchanges, at the end of April 2010.
US$3.6 Bn of net new assets went into European listed ETFs/ETPs in April 2011. US$2.8 Bn net inflows went into equity ETFs/ETPs, of which US$1.6 Bn went into ETFs/ETPs providing emerging markets exposure while ETFs/ETPs providing broad European exposure saw net outflows of US$1.2 Bn. Fixed income ETFs/ETPs saw net outflows of US$0.4 Bn, of which money market ETFs/ETPs experienced US$0.3 Bn net outflows while high yield ETFs/ETPs saw net inflows of US$0.2 Bn. US$1.1 Bn net inflows went into commodity ETFs/ETPs, of which US$0.5 Bn went into ETFs/ETPs providing exposure to precious metals and US$0.4 Bn went into ETFs/ETPs providing broad commodity exposure.
Of the US$2.8 Bn of net new assets in European listed ETFs in April 2011, Source Markets gathered the largest net inflows with US$0.9 Bn, followed by db x-trackers with US$0.6 Bn net inflows, while iShares and Lyxor Asset Management had the largest net outflows with US$0.2 Bn.

Asia Pacific (ex-Japan) ETF industry:

The Asia Pacific (ex-Japan) ETF industry had 250 ETFs with 362 listings and assets of US$58.6 Bn, from 63 providers on 13 exchanges at the end of April 2011. This compares to 168 ETFs with 267 listings and assets of US$44.4 Bn, from 53 providers on 13 exchanges, at the end of April 2010.

Japan ETF industry:

The Japanese ETF industry had 84 ETFs with 88 listings and assets of US$29.4 Bn, from seven providers on three exchanges at the end of April 2011. This compares to 70 ETFs with 73 listings and assets of US$26.3 Bn from six providers on two exchanges, at the end of April 2010. There are 178 ETFs which have filed notifications in Japan.

Latin America ETF industry:

The Latin American ETF industry had 27 ETFs, with 407 listings and assets of US$10.4 Bn, from four providers on three exchanges at the end of April 2011. This compares to 21 ETFs, with 243 listings and assets of US$9.1 Bn from three providers on three exchanges, at the end of April 2010.

Canada ETF industry:

The Canadian ETF industry had 180 ETFs and assets of US$43.1 Bn, from four providers on one exchange at the end of April 2011. This compares to 134 ETFs and assets of US$33.0 Bn from four providers on one exchange, at the end of April 2010.

Source: BlackRock, Carral, May 2011

Filed under: Asia, Latin America, News, , , , , , , , , , ,

Brazil: BVMF (BM&F BOVESP) News May 2011, Nr 26


BM&FBOVESPA launches four new indices
BM&FBOVESPA began on May 2 the calculation and publication in real time of four new indices: the Brazil Broad-Based Index, the Dividend Index, the Basic Materials Index and the Public Utilities Index.

Market Makers for Options on the Stock of OGX and Itaú Unibanco
BM&FBOVESPA announced the start of the process to select three market makers for options on the stocks of OGX Petróleo e Gás Participações S.A. (OGXP3) and Itaú Unibanco Holding.
New bidding process to select the manager for three new ETFs
The winner will have an exclusive one-year license for the use of the Dividend Index (IDIV), Basic Materials Index (IMAT) and Public Utilities Index (UTIL).
More than USD 11.5 billion in public offerings and follow-ons in 2011
In the year to April 20, BM&FBOVESPA registered more than USD 11.5 billion in public offerings and follow-ons. There have been seven Initial Public Offerings (IPOs) in 2011.
Enforcement Training in Brazil
“Securities Enforcement Training in Brazil” was promoted on May 9 by BM&FBOVESPA Market Surveillance (BSM), the Securities and Exchange Commission of Brazil (CVM) and SEC
New portfolios for the Ibovespa and other indices for the May-August 2011 period
BM&FBOVESPA announced the Ibovespa Index theoretical portfolio valid for the period of May 2 to August 31, 2011, based on the closing of the April 29, 2011 session.
ETF financial volume hits record figure in April
BM&FBOVESPA Exchange Traded Funds (ETFs) reached a record BRL 942.43 billion financial volume in April, in 28,969 trades and 14,734,230 units.
Join BM&FBOVESPA in the 2011 events.
Volumes and trades by Direct Market Access (DMA)
BOVESPA Segment (Equities)
In April, order routing via DMA in the BOVESPA* segment totaled BRL 87,859,208,000.00 and 9,531,246 trades.
BM&F Segment (Derivatives)
In April, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 23,531,729 contracts traded and 1,840,059 trades.
MARKET RESULTS – BM&F Segment April 2011 (derivatives)
In April, derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 66,111,464 contracts and BRL 4.57 trillion in volume.
MARKET RESULTS – BOVESPA Segment April 2011 (equities)
In April, equity markets (BOVESPA segment) traded BRL 127.04 billion, in 9,864,428 trades, with daily averages of BRL 6.68 billion and 519,180 trades
Source, BM&FBOVESPA, 17.05.2011            COMPLETE REPORT

Filed under: BM&FBOVESPA, Brazil, Exchanges, , , , , , , , , , , , ,

ETF Landscape: Industry Review – Q1 2011 – BlackRock

At the end of Q1 2011, the global ETF industry had 2,605 ETFs with 5,905 listings and assets of US$1,399.4 Bn  from 142 providers on 48 exchanges around the world. This compared to 2,131 ETFs with 4,133 listings and assets of  US$1,081.9 Bn from 123 providers on 42 exchanges at the end of Q1 2010.  ETF Industry Review_Q1-2011

Additionally, there were 1,119 other ETPs with 1,835 listings and assets of US$183.7 Bn from 58 providers on 23 exchanges. This compared to 718 ETPs with 1,025 listings and assets of US$153.6 Bn from 42 providers on 18 exchanges at the end of Q1 2010.

Combined, there were 3,724 products with 7,740 listings, assets of US$1,583.2 Bn from 178 providers on 52 exchanges around the world at the end of Q1 2011. This compared to 2,849 products with 5,158 listings, assets of US$1,235.4 Bn from 147 providers on 44 exchanges at the end of Q1 2010.

Below is a list of some upcoming events where we will be presenting:

Asia Trader and Investor Convention 2011, Singapore 07-08 May 2011
Complimentary passes are available

2nd Annual Inside ETFs – Europe Conference, Amsterdam, 05–06 May 2011
Complimentary passes are available for institutional investors.

Turkey Investment Summit, Istanbul, 09–11 May 2011

iShares Investment Konferenz, Frankfurt, 11 May 2011

22nd Annual Conference on Globalisation of Investment Funds, Boston,
15–18 May 2011

ETF & Indexing Investments, New York, 16–18 May 2011

Factset Investment Process Symposium, Monaco, 23–25 May 2011

ASX ETF Institutional Conference, Sydney, 02 June 2011

The 10th Annual Canada Cup of Investment Management, Toronto,
07–08 June 2011
Complimentary passes are being offered by IMN to attend this event to investment professionals at Pensions, Foundations, Endowments, Hedge Funds, Insurance Companies as well as for Registered Investment Advisors. Please contact Jackie Rubbo at

ETF & Indexing Investments, Madrid, 15–16 June 2011

The Mondo Visione Exchange Forum, London, 15–16 June 2011

Africa Investment Summit, Johannesburg, South Africa 20–23 June 2011

European Cup of ETFs and Investment Management, London,
19–20 September 2011
Complimentary passes are being offered by IMN to attend this event to investment professionals at Pensions, Foundations, Endowments, Hedge Funds, Insurance Companies as well as for Registered Investment Advisors. Please contact Jackie Rubbo at

ETF & Indexing Investments, London, 17–19 October 2011

Please join ETF Network on Linkedin at

Source: BlackRock, 06.05.2011

Filed under: Banking, News, Services, Wealth Management, , , , , , , , , , , , , , , , , , ,

ETF panorama: Aspectos Destacados del 1er Quartal 2011 BlackRock

La industria global de los ETFs mantiene la trayectoria ascendente con la que inició el año, si se comparan los 2,605 ETFs con activos por USD$1,399.4 millones al cierre del primer trimestre de 2011, con respecto de los 2,131 ETFs con activos por USD$1.082 mil millones en el mismo periodo de 2010.  _ETF  Reporte 1er Quartal 2011

En Latinoamérica el sector de ETFs cuenta con 26 ETFs, 405 listados y activos bajo administración por USD $10.2 mil millones, de ocho proveedores en tres bolsas, que se comparan con 21 ETFs, 231 listados y activos por USD$9.3 mil millones de tres proveedores en tres mercados que había a finales del primer trimestre de 2010.

Como sabes, los ETFs son instrumentos que siguen índices, listados y cotizados en mercados bursátiles, que proporcionan transparencia diaria al portafolio. El reporte da cobertura a los productos Exchange Traded Funds (ETFs) a escala global e incluye rankings de proveedores de ETFs e índices globales, en Estados Unidos, Europa, Japón, Asia, Latinoamérica, Medio Oriente y Africa.

Además, incluye comentarios respecto al impacto en los mercados de inversión global debido a acontecimientos como los disturbios en países de Oriente Medio y norte de Africa, así como desastres naturales como el terremoto y tsunami, y la consecuente catástrofe nuclear en Japón.

Adjunto te hacemos llegar el reporte completo en inglés, en formato PDF. En caso de cualquier duda adicional, quedamos a tu disposición.

Source: BlackRock- Carral Sierra, 06.05.2011

Filed under: Asia, Exchanges, Latin America, Library, News, Services, , , , , , , , , , , , , , , , , , , ,

VAM: Vietnam Market Analysis April 2011

Inflation continued to be headline of the month             VAM Monthly Newsletter – April ’11.
Despite the governments increasing efforts in the last several weeks, April CPI came out up by 3.3% MoM and 17.5% YoY, the highest since December 2008 and far exceeding most expectations. This brought CPI growth YTD to 9.64%. Estimates are pointing to 16-18% for 2011 while the governments revised target is to keep 2011 CPI growth not higher than that of 2010, i.e. at 11.75%. Promptly, the central bank reacted by raising two policy rates by 100 basis points on 29 April (increasing refinance rate and discount rate to 14% and 13% per annum, respectively).
However, it seems a series of policy rates hikes applied one after another by the central bank in March and April have been insufficiently effective to balance major adverse impacts on inflation, such as large price hikes of local necessity commodities (electricity, fuel, coal), escalating food prices, high interest rates and prolonged global commodity price uptrend. With more fuel price hikes imminent to close the domestic and international price gap and governments decision to adjust electricity price further (likely up by 40%), effective this June we think CPI might not have peaked for this year yet.
Credit tightening will remain probably through Q3
Given ongoing inflationary pressures, interest rates will not come down in the coming months. And the government has repeatedly sent clear signals that they will sacrifice a small growth to contain inflation. GDP growth target for this year was revised down to 6-6.2% from 6.5-7% previously. Local banks have been ordered to reduce credit to non-production purposes to 16% by year-end, and a failure in doing that will possibly result in doubling of reserve requirements (currently between 1-3%). This means loans for sectors like real estate, securities investment and consumption are going to be cut back.
This time, the government has shown a strong determination that they will not prematurely halt the tightening policy as they did in the past. We would expect further tightening on credit and public spending if inflation is not going to improve. Hence, we think inflation will eventually be put in check, but it will take more time. Observers are expecting to see improvement in inflation toward the end of Q3 when governments measures have taken clearer effects.
Stability in foreign exchange market was a bright spot in macro picture
Improving stability of the FX market in April was the fruit of a set of governments measures to restore confidence in the currency and gradually minimize dollarization of the economy, an ingrained problem and a culprit for FX instability. According to Asian Development Banks Vietnam Director, dollars make up about 20% of money used in Vietnam. After the central bank applied dollar deposit cap in April (1% per annum for institutional depositors and 3% per annum for individuals vs. popular 14% deposit rate in dong terms), dollar hoarding has been visibly discouraged. A big commercial bank in Ho Chi Minh city said recently that they bought U$15 million per week compared to U$1-2 million previously, mainly from the public.
Toward month end, the dong appreciated against the dollar by 7% in the unofficial market and 3% in the interbank market from its lowest level in February. Encouraged by initial results toward de-dollarization, the government is considering measures against goldenization of the economy, the other ingrained problem on the FX front. A deadline to stop gold deposit and lending activities at banks are expected to be released soon. With all these factors, we think the stability of the FX market will continue through the year.
Domestic indicators continued to show positive signals
Apart from inflation, other domestic indicators continued to show positive signals. In the first four months, industrial production value and retail sales expanded respectively by 14.2% and 22.7% on-year. Both exports and imports registered significant growth of 35.7% and 29.1% on-year respectively. However, trade deficit is not getting improved. With March number being revised up to U$1.4 billion from U$1.15 billion and trade deficit in April estimated at U$1.4 billion, year-to-date number stood at U$4.8 billion versus U$4.6 billion in the same period last year. The slight increase in trade deficit was mainly attributable to rising global commodity prices.
With regard to capital inflows, though committed FDI year-to-date showed a decline of 50% YoY, disbursed FDI was still up by 0.6% YoY, estimated at U$3.62 billion. Disbursed ODA in the same period was recorded at U$404 million, fulfilling 16.8% of full-year target. Overseas remittances this year are forecast to be affected by the dollar deposit rate cap, but real effects remain to be seen.
Equity market saw a modest rebound though at low volume
CPI in April seemed not to create much impact on local investors sentiment as the market did rebound, though at low volume, after the news came out. The explanation was that the CPI number had been largely priced in. Investors are now looking to CPI in May. The further tightening measures have certainly affected the market. The VN-Index closed the month at 480.08 points, up 4.1% MoM with low liquidity. Average daily trading value combined on both bourses dropped to U$42 million versus U$62 million in March. However, as stock valuation is at historically low level, foreign investors have significantly increased stocks accumulation during the month with net purchase of U$43.3 million versus U$9.1 in March, mainly on the HOSE.
Our ViewThe AGM season has almost come to an end and the overall picture of revenue and profit growth targets for 2011 has been rather unexciting. A large number of listed firms operating in real estate, manufacturing, and some other sectors saw a tumble in the year-end results and even unimpressive performance in the first quarter of this year, resulting from rising cost of capital and accelerating prices of material inputs. As a result, 2011 business plans were set at very conservative levels compared to last year. In contrast, listed banks, especially big ones, still announced strong profit numbers for 2010 and set plan for quite ambitious profit targets for 2011 regardless of tougher regulatory requirements and volatility in the capital markets.
Generally speaking, since the government keeps emphasizing their priority to curb inflation rather than push GDP growth, we believe the lending interest rate will likely not come down, at least till the end of Q3/2011, which will then create more burdens on businesses operations. Therefore, we see no major positive catalyst to lift the stock market up in short-term. However, in a medium to long-term, we expect tightened monetary policies and fiscal policies will soon have actual impacts to damp inflationary pressure this year and stabilize the market. Additionally, share price plummeting to the low level could be seen as good opportunities to acquire stocks at cheap price. In fact, an active net buying of U$43.3 million from foreign investors in April can be considered positive signs of regaining investors confidence in the coming time.
At the moment, we think companies with more cash, low debts and good business strategies in lines with global markets demand will continue to show resilience through tough times. As such, we uphold our interests in stocks of telecommunication, dairy, rubber and petroleum sectors. We also watch with interest the banks performances, which were generally quite impressive in the first quarter of 2011, despite unfavorable macroeconomic conditions.
Source: VAM, 05.05.2011

Filed under: News, Vietnam, , , , , , , ,

Brazil – Current Scenario Keeps the Market on Tenterhooks– Monthly Allocation- May 2011

Internationally, Advances Should Continue Slowly but Surely
We foresee a relatively neutral international scenario for May, but the outlook for the global economy seems unlikely to improve in the upcoming weeks, and several issues might continue to raise investors´ concern. In the US, the government’s debt ceiling issue is unlikely to cause any market disruptions, but it could generate some nervousness. Also, although economic activity continues to grow, the increase of the jobless claims in the last two months could cast some doubts on consumption’s short term outlook. Meanwhile, in the Euro Zone, Spain has continued to manage to sell debt as scheduled, and talks between Portugal and the EU on the financial assistance package have progressed. Nevertheless, the fact that Portugal will hold general elections in June and Finland’s population have shown growing resistance to EU’s current assistance framework indicates that the road to the package is likely to be bumpy, generating some noise and fear.


1Q Results Season to Drive the Market
In terms of the domestic scenario in Brazil, an uncertainty mood is likely to continue concerning the Federal Government fight to curb inflation. The government has continued to try to fight inflation without jeopardizing economic growth, which generates many doubts on the economic outlook for 2011 and 2012. On the other hand, the Central Bank has, at least, acknowledged that the monetary tightening cycle will have to be extended, which is encouraging. In all, the local macro scenario tends to generate less anxiety, because market players will live for some time with the prolonged gradual tightening of the monetary policy, the slow appreciation of the Real, some fiscal tightening, and remaining doubts on whether the government’s strategy will work.

The first half of May will concentrate the majority of the 1Q season reports. Given the aforementioned scenario, where nothing impacting is expected, the market should be driven this month by corporate results and news. With most of the 1Q macroeconomic figures already out, we do not believe in unexpected results except for specific exceptions.

Having this calmer outlook for the local economy in mind and with the negative bias from the still unabated inflation, we continue believing in a volatile stock market for May with a slightly negative trend. Given this, we have changed very little our previous portfolio for May. We included Raia and Telesp, with 5% weight each. We also withdrew HRT from the list, due to the potential overhang with the end of the lock up agreement between the pre IPO shareholders. With these changes, we increased the total number of companies by one so we re-balanced the lower weights to 5%, from 6%.

Source:BANIF, 02.05.2011

Filed under: Banking, Brazil, Latin America, News, Risk Management, Services, , , , , , , , ,

Brazil – Measures to Curb Inflation in Limelight – Monthly Allocation- April 2011

International Scenario Might Calm the Market in April

March brought to Europe, Northern Africa and Asia, a number of serious events, such as the disaster in Japan, civil war in Libya and the fall of the Portuguese Cabinet, which affected most markets negatively. However, we expect the international scenario to improve in April for two main reasons. First, these events were of a non-recurring nature. Second, key indicators suggest economic recovery in China, US and Europe continues, despite all the social and political turmoil mentioned above, and the inflationary pressures.

Brazil – Monthly Allocation – April 2011 detailed report

All attention focuses on the next move by the Central Bank

Inflation continues at a high level, while economic activity also seems intense. Credit figures released in February were high, although there were doubts about the base of comparison, with Carnival holidays having been in February in 2010 and March in 2011. Data on credit suggests that average maturity terms for credit lines increased, which might explain part of this behavior, as it reduces the concern of an increase in the level of interest rate hikes.

This unabated inflation is evidence that Government action was not enough, indicating the need for further measures. We are still in the middle of the interest rate hike cycle intended to curb inflation. In April, we bet on a final 50 basis points hike for this ongoing move, to 12.25%, after which we believe the Central Bank will wait and see if it needs to increase rates further in the final part of the year. After this last move, it is likely that the CB will make use of alternative measures to continue its fight against inflation. We believe that the market mood will depend greatly on what it decides. If it announces further measures in April, we believe market tension should ease while, if it does nothing more, nervousness might prevail.

Another issue not likely to affect the short term, but which should appear more and more on the market’s radar, is the possibility of Moody’s rating agency upgrading the Brazilian sovereign risk. The agency suggested that it might do so by the end of the second quarter. Currently, Brazil remains at the lowest investment grade level, ten levels below the top of the range.

After the results season, and with this expectation of a tense local scenario, we have changed our portfolio for April. We increased the weight of Vale to 20 from 15% and made substitutions with the same weights: 1) Eletropaulo for Tractebel, with dividends already paid out, and 2) We substituted MRV and PDG for Even and EZ Tec because the first two reported reduced margins. Finally, we withdrew Telesp, as the share performed well and we see no short-term catalyst.

Source: BANIF, 01. April 2011

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