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Latin America: Investor News Letter 19.October 2012

Mexico

Elektra to offer No-Fee Banking and Long Term loans to US low income population
Billionaire Ricardo Salinas said he wants to offer no-fee banking deposits and longer-term loans to low-income U.S. consumers, aiming to export his Mexico business model, successful in 8 Latin American countries to the world’s biggest economy.

Mexico’s market shines as reforms, confidence take hold
NYSE Technologies, Bolsa Mexicana and ATG build Mexican trading infrastructure
Slim-backed Mexican firm plans IPO, new cement company
Alsea to invest $110 million in Mexico, Argentina Starbucks cafes
Mexico passes law to combat cartel money laundering

Brazil

Itau Sinks as Rousseff Plan Hurts Bank Profits: Corporate Brazil

Brazil’s push to drive down consumer borrowing costs is eroding the value of its biggest banks.

Brazil wants to restrict strikes in public sector
Monsanto suspends collection of royalties in Brazil following state court ruling
Brazil M&A hits five-year low on turmoil, state intervention
Brazil and South Africa Form Partnership On Future Investment Promotion Initiatives
Brazil’s Water Sector Benefits From Investment Ahead of World Cup, Olympics

Latin America

Cencosud of Chile to Acquire Carrefour Colombia Division

Cencosud SA agreed to buy Carrefour SA’s Colombian unit for 2 billion euros ($2.6 billion) as it taps rising consumer spending in Latin America and the world’s second-largest retailer retreats from markets it can’t dominate.

Venezuela/Paraguay rift spoils Brazil’s plans for a ‘normal’ Mercosur summit
Singapore, the fastest growing market for Latin America
CAF Encourages Singapore to Invest in Latin America
Cuba Praises China-Latin America Ties
Latin America can produce double-digit investment returns over next decade
Arab and Latin American leaders agree to investment bank
LatAm’s Largest Solar Power Plant  in Peru receiving 40 MW of Solar PV Modules from China
Arab and LatAm leaders agree to investment bank
Peru central bank could allow more pension funds invested abroad
Latin American Ratings Strong Enough to Weather a Commodity-Cycle Downturn
Latin American gold rush brings riches, conflict
Latin lithium output mired in controversy

Source: Various 19.10.2012

Filed under: Argentina, Banking, Brazil, Chile, China, Colombia, Energy & Environment, Mexico, Peru, Singapore, Venezuela, , , , , , , , , , , , , , , , , , , , , , ,

Brazil’s President wants to boost Trade Ties with Saudi Arabia

RIYADH – Brazilian President Luiz Inacio Lula da Silva told Saudi business leaders on Sunday that he wanted to strengthen the ties between his country and Saudi Arabia in all trade areas.

The Brazilian leader delivered a speech after meeting with the Riyadh Saudi Trade and Industry Association in which he called for intensified business contacts and visits by businessmen from the two countries. “Brasilia and Riyadh are resolved to exchange opinions” and to hold meetings to strengthen cooperation and ties that unite the two countries, Lula said.

The two nations are going to push for more bilateral visits and contacts to foster cooperation in all areas, especially in agriculture, petroleum and chemical production, the Brazilian president said.

Lula emphasized the resources Saudi Arabia has in the area of investment, knowledge, industry and technology, calling this sufficient reason for his country’s business community to travel to the Middle Eastern kingdom to pursue investment opportunities in the industrial and petroleum sectors.

Riyadh Saudi Trade and Industry Association head Abdel Rahman bin Ali al Yerisi said in his own remarks that Lula’s visit will contribute to bringing about a situation in which greater business cooperation can be achieved between the two countries.

“The meeting of the Brazilian president with Saudi businessmen from Riyadh will generate a strong impulse for reactivating bilateral cooperation, thanks to the enormous economic and human capacity both countries possess,” the Saudi business leader said.

During the meetings between the two countries’ delegations, several accords were signed, among them one between Brazilian state-owned oil company Petrobras and the Saudi Modern Chemical Company.

Source: Latin America Harald Tribune, 17.05.2009

Filed under: Brazil, Energy & Environment, News, , , , , , ,

Malaysia raises profile as an Islamic fund hub

Malaysia now has more sharia funds than Saudi Arabia, but is still second in terms of assets under management. Malaysia’s efforts to promote itself as a global Islamic investment hub are paying off.

The country has overtaken Saudi Arabia in terms of the number of locally domiciled sharia funds, and is second to the huge Middle East market in terms of sharia assets under management (AUM), based on data from financial services research firm Cerulli Associates.

As of November 2008, sharia funds domiciled and managed in Malaysia totalled 145, compared to just 131 in Saudi Arabia. These range from investments in money markets and sukuks (bonds) to regional and global equities.

Malaysia has, over the past few years, worked to establish itself as a centre for sharia fund manufacturing, in line with its efforts to promote itself as a global Islamic investment hub. Malaysia now possesses the most highly developed regulatory structure for Islamic finance in the world, according to Cerulli.

So far, Malaysia has attracted eight international sharia fund managers by offering a host of tax and other incentives.

However, in terms of sharia AUM, Saudi Arabia is still the clear winner worldwide. Sharia AUM in Malaysia has grown from $1.4 billion in 2003 to $4.6 billion in November 2008. That’s nevertheless just a fraction of Saudi Arabia’s $13.9 billion in sharia AUM. Malaysia’s sharia AUM is also small compared with the estimated $40 billion in AUM of conventional funds managed onshore.

“Malaysian-domiciled sharia funds are still unable to compete with Saudi funds in terms of asset size,” says Ken Yap, Singapore-based head of Asia-Pacific research at Cerulli.

To illustrate his point, Cerulli data shows that the AlAhli Saudi Riyal Trade Fund in Saudi Arabia is the world’s largest sharia portfolio, with $3.6 billion in assets. In contrast, Malaysia’s largest sharia portfolio — Public Ittikal Fund — has $421 million in assets.

“While the Malaysian sharia market has shown impressive growth, managers need to do more to build up assets in each of its sharia funds, rather than simply continuing to launch more funds,” says Shiv Taneja, London-based managing director at Cerulli. “This means marketing sharia funds to high-net-worth individuals and institutions, and working with the banks, including Islamic banks, to improve sharia fund distribution to the public.”

Saudi Arabia’s obvious advantage over Malaysia, Cerulli’s Yap notes, is the deep pockets of its institutional, high-net-worth and retail investors.

In Malaysia, the focus has been mostly on retail investors — understandably so because they are an easy target for the asset management arms of banks, for example. Asset management companies with a conventional funds business in Malaysia are also setting up sharia units and they are targeting existing clients.

“The sharia funds in Malaysia are focused more towards the retail client base, which needs more variety and, thus, fund managers need to launch more funds. In Saudi Arabia, the funds are focused more towards the wholesale client base,” says Trica Sum, a Singapore-based analyst at Cerulli.

Both Saudi Arabia and Malaysia are capable of attracting and managing offshore funds, but the Gulf state has done more to cultivate that market over the years.

Cerulli’s Yap believes that in the near-term the potential for sharia AUM growth in Malaysia still rests with the retail market. Over the long-run, however, he says there is strong potential for growth in the offshore market of sharia firms in Malaysia, the demand from institutional investors and pension funds in Malaysia, and in new businesses from new Islamic fund management company license holders.

Malaysia’s Securities Commission has awarded eight foreign Islamic fund management licenses to Aberdeen Islamic Asset Management, BNP Paribas Islamic Asset Management, Nomura Islamic Asset Management, Kuwait Finance House (Malaysia), DBS Asset Management, CIMB-Principal Asset Management, Global Investment House and Reliance Asset Management.

The Malaysia government allows 100% foreign ownership of Islamic fund management companies, in line with its bid to attract more key fund players to the country. The incentive is part of ongoing liberalisation measures in Malaysia’s capital market as well as being aimed at complementing the broader Malaysian International Islamic Finance Centre (MIFC) initiatives of positioning the country as a hub.

Islamic fund management companies are allowed to invest all their assets overseas and will be given income tax exemption on fees received until 2016. They will also be able to tap into M$7 billion ($2.1 billion) in seed money from the Employees Provident Fund, the national pension fund for the private sector in Malaysia. Tax incentives are also being offered to existing stockbrokers that set up Islamic subsidiaries.

Cerulli estimates that global sharia fund assets totalled around $35 billion in October 2008 and had been growing at 23% over the past five years, well ahead of conventional mutual funds. Although this rate is expected to ease during the course of the global financial crisis, the firm believes Islamic finance has only started to take root in many Muslim nations and has plenty of room for expansion.

Source:AsianInvestor, 19.02.2009

Filed under: Islamic Finance, Malaysia, News, Services, , , , , , , , , , , , , ,