Brazil record foreign direct investment more than compensates current account deficit
Brazil Shares Close Higher On Foreign Fund Buying
Media leaders: "Infrastructure projects in the Amazon, Rio+20 to lead Latin American forestry news in 2012"
The economic growth of Brazil is cause for celebration not envy
E.ON, MPX To Build Power Plants In South America
Three ideas that are good for both economy and environment
19 New Millionaires a Day in Brazil, Since 2007, According to Study
2011 Brazilian Investments Market and What to Expect for 2012
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Welcome to the February edition of the Greenwood Management monthly newsletter.
Our aim is to send out a newsletter on a monthly basis to advise you of future events and report on previous industry related themes and news articles.
Greenwood Management started 2012 in a positive manner, seeing a seventeen percent rise in charcoal prices between December and January. We found this news extremely encouraging and hope to see the trend continuing throughout the year. For more details on charcoal prices from Brazil and their historical dips and peaks, enter your details here and we will ensure regular price updates are sent to your inbox.
Other exciting news...Greenwood Management have expanded their network into eastern Europe with the appointment of Robert Porter, who will be running our Czech Republic office in Prague. Robert has a strong financial investment advisory background and has previously worked in stockbroking. His past employers include American Express and Merrill Lynch.
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Brazil posted a record current account deficit in 2011 of 52.6 billiondollars, up from 47.3 billion in 2010, the central bank said. The 2011 deficit was equal to 2.12% of gross domestic product. But, as in past years, the current account gap was more than covered by rising foreign direct investments. Foreign direct investment hit a record of 66.7 billion dollars in 2011, up from 48.5 billion the previous year.
Armed with a strong Brazilian Real currency and backed by rising personal incomes, Brazilians spent a record of more than 21 billion dollars on overseas travel in 2011, rolling up a deficit in the country's travel accounts of 14.5 billion. The gap in travel accounts in 2010 was 10.5 billion.
Meanwhile, multinational companies installed in Brazil stepped up profit remittances in 2011, this time to a record of 38.2 billion. Remittances in 2010 were 30.4 billion.
To read the full story click here.
Brazil Shares Close Higher On Foreign
The start of 2012 has seen foreign investment inflows into Brazil dramatically increase, with foreign funds actively targeting the countries blue chip organisations. With the fear of a double-dip recession looming over Europe and the US, and economists predicting Brazils economic growth to rise by 3.5% the year, the first 3 weeks of January have shown net foreign investment inflows into Brazil totalling $5.0 billion.
Marcelo Giufrida, president of the Brazilian Capital markets Association has reported the majority of this spend has gone into stocks rather than the previously popular fixed-income investments. The reason for this, say analysts, is that Brazilian stocks are cheap at the moment due to the Ibovespa Index losing 18% during 2011. With a large amount of liquidity still residing in global markets, it is expected that Brazil will see a good portion of investment due to its predicted economic growth during this year.
Results of the Rio+20 Earth summit along with the impact of several large infrastructure projects due in the Amazon rainforest are due to cause the biggest headlines across Latin America in 2012. The impact these projects will have on the forests and the indigenous population is going to be a cause for concern, with an evident quandary between environmental protection and the development of the region. The Rio+20 Earth Summit is being seen as chance to progress the objective of achieving a more sustainable development plan.
Expectations are high for Brazil to effectively participate in addressing the social and environmental causes of its Latin American neighbours, with a focus on issues including sustainable production chains and reducing poverty in the region.
Luis Alberto Gallegos, journalist and environmental consultant believes that media attention will be focused towards investment in energy infrastructure as "the global crisis is driving many countries, especially the European ones, to look with voracity towards Latin America as an investment point".
It promises to be a big year for forests in Brazil.
Latest estimates have shown that Brazil's economy is now the sixth largest in the world, recently overtaking the UK. Based on future predicted growth this lead is due to increase with Germany and France also likely to fall out of the top six by 2020, possibly being replaced by both India and Russia.
Despite what you may be thinking, this news is not all doom and gloom for the UK. Since 1990 UK exports to Brazil have risen from £600 million to £3.2 billion, providing tens of thousands of manufacturing jobs across the UK. As Brazil's population benefit from improved living standards, more opportunities arise for British companies to sell them products and services creating further jobs and increased revenues. Fund managers and investors are also set to reap the benefits with a wider variety of investment opportunities available, set to generate handsome returns for decades to come.
As the French playwright and novelist once said "Envy is the most stupid of vices, for there is no single advantage to be gained from it". The rise of Brazil should be viewed with optimism and opportunity, not jealousy.
As growth for European utility companies slows at home, the race to expand their presence in booming emerging economies has just heated up with the announcement of German utility giant E.ON AG (EOAN.XE) agreeing to purchase a stake in Brazilian power company MPX Energia SA. This deal will see the two companies collaborating to invest billions of dollars in new South American power plants. E.ON will acquire a 10% stake in MPX for €350 million with the shares to be purchased through a capital increase at MPX.
The Brazilian firm has large ambitions with plans to build up to 20GW at a cost of €34 billion and the partnership with E.ON will assist this costly capital program, also supported by Brazilian development bank BNDES. The new alliance will seek contracts to build power plants from Brazilian government auctions as well as large private corporations. As well as Brazil, E.ON has indicated future potential investments in both India and Turkey.
As we enter a new year, the world continues to be in the grips of dual crises: a stubborn economic downturn with widespread job losses combined with accelerating global warming threatening vulnerable communities.
Many argue that dealing with climate change in the midst of an economic slump will hurt recovery efforts. The underlying reality, however, is quite the opposite. Not only can preparing for climate change offer opportunities for economic growth, it would be unwise to pursue one without the other.
Yet attempts to deal with the economic downturn and climate change have run into a seemingly intractable stalemate. This dynamic was clearly on display at the recent Durban climate talks, where economic anxiety rang through hallways. While the final outcome was significant, it was hindered by the weight of domestic economic and political conditions.
Phasing out fossil fuel subsidies, although politically challenging, would spur global clean energy development and generate growth. Countries spent a staggering $409bn dollars on fossil fuel subsidies in 2010.
19 New Millionaires a Day in Brazil, Since 2007
While Wall Street and The City are beleaguered and "Occupied," Brazilian financial markets are expanding and Foreign Direct Investment finished 2011 at a record US $65 Billion. "Nobody wants to miss out on a market like this," says one financial services executive."
Brazilian financial markets are still light years behind Wall Street. But this is exactly what is attracting these professionals: the room for growth. "Unlike the U.S. and Europe, our capital market is expanding," says Alberto Kiraly, vice president of the Brazilian Association of Financial and Capital Markets (Anbima).
One indicator of this growth are the funding of investment in Brazilian companies through fixed-income securities. "They only depend on the performance of the domestic market, so it reflects what happens here, without contamination of the external crisis," said Kiraly. Until November, the offering of these securities totaled R $ 77.7 billion - R $ 2.3 billion more than the same period in 2010.
2012 began with a new partial exit announcement in Brazil: Ideiasnet sold 2.0% of its 7.0% stake in Spring Wireless, Inc. to Harvest Growth Capital, LLC based on an enterprise value of R$ 308 million. The amount received represents a return of approximately two times the value initially invested, according to the announcement to the market and shareholders.
Starting the year with an announcement of exit gives you a hint about how this market has been evolving in the last years. Despite the official numbers for the Venture Capital and Private Equity sector compiled by FGV’s (FundaçãoGetúlio Vargas) GVCepe with ABVCAP and ABDI support (last edition: 2010), there is no official numbers for angel investing in Brazil yet, but a big leap in the last year is more than evident.
In 2012 the flow of external investments and the opportunities opened by the Olympics and World Cup in the following years tend to increase and it is expected to boost the local entrepreneurs and investors market. If not, the Brazilian market will lose its best opportunities in decades.
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