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Newsletter
October 2011 edition

 

 

Six weeks to save Euro from collapse?

FTSE shrugs off Greek crisis with £53bn gain

Further fall in Gold Prices Predicted

Investor nervousness causes further fall in Copper

Brazil to be among 'top destinations of foreign investment'

Vale in talks with Chinese Companies for development of Brazilian Steel Plant

Confidence in Brazilian investment ‘growing’ –Ernst and Young

Green News

Charcoal Prices

 

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Welcome to the October 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.

You may have seen in our last newsletter, information on the potential partnership between Greenwood Management and the Universidad de Tras-os- Montes e Alto Douro (UTAD) in Villa Real, Portugal. Greenwood is now delighted to announce that the strategic partnership is now complete as of September 8th at UTAD in Villa Real, Portugal. Under a 5 year agreement, Greenwood Management will now sponsor the best performing students each year to travel to, live, work and study in our forestry projects for a period of up to 6 months. We strongly believe that this partnership will bring many benefits to all parties - the students, ourselves and most importantly, our investors!

This month, given the exceptional turmoil in European equity and global commodity markets (in particular the Euro currency), we have focused this newsletter on how Brazil is sidestepping many of the global recessionary issues and the dreaded double dip scenario which is being widely reported for European/ US economies. As you will read, Brazil, although not immune to this volatility, is maintaining a relatively stable period of growth and still enjoys positive investor sentiment regarding its economic outlook. Charcoal markets remain strong as a result of increased investments from steel producers with China stepping in to the fray with plans to invest more significantly in steel production in Brazil. For specific details on company projects, we are now producing specific client reports on the status of our projects and specific company developments. If you are a current investor with Greenwood Management and are not currently receiving a client report please click here to request a copy of the 1st edition of our client report.

We have included below some investment articles from the press which illustrate the confusion in markets currently. Enjoy reading and look out for announcements on our new projects.

If you have any suggestions for future newsletters please click here to provide your suggestions and we will do our best to meet your requests.

 

Six weeks to save Euro from collapse?

The whole world is now attempting to save the Euro. Last week, the Washington-hosted summit of G20 finance ministers and central bank heads focused on the possible ways of avoiding the collapse of the single European currency. Today, the IMF openly requests help from Russia and other BRIC countries but how can Europe be assisted if it cannot even work out a single monetary policy? People of the donor countries are strongly opposed to paying off someone else’s debts, while EU member states are too proud to beg and go around with hat in hand. Suggestions are coming from both sides concerning the withdrawal of crisis-hit countries from the Euro zone. Experts are also sure this may mend the situation. We have the following comments from leading analyst of the FinMarket company Andrei Lusnikov:

"Technically, the withdrawal of not only Greece but also other countries, primarily those of southern Europe, could mitigate monetary policy-related problems. Risks accompanying the introduction of the Euro were underestimated in view of Europe’s very different countries and monetary policies. As for Greece’s looming default, one of the ways to tackle it would be that country’s leaving the Euro zone and reverting to its old currency, the drachma. Greek obligations may be calculated proceeding from its own national currency, which will help smooth out EU problems emerging because of Greece’s deteriorating economy on the one hand and high Euro exchange rates on the other,"  says Andrei Lusnikov.

To read the full story click here.

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FTSE shrugs off Greek crisis with £53bn gain

The FTSE bounced back yesterday amid hopes that the International Monetary Fund and European leaders are soon to agree a package to resolve the debt crisis. The index rose more than 200 points, about 4 per cent, adding £53billion to the value of the top 100 firms.

It was a story repeated across Europe and on Wall Street, recovering a large chunk of the losses suffered at the end of last week when G20 leaders expressed frustration over the eurozone’s reluctance to deal with the worsening debt crisis in Greece. The London rally was the best trading session since May 10, 2010.

It came as Greek Prime Minister, George Papandreou was last night locked in talks with German chancellor, Angela Merkel over his country’s financial reforms. Earlier, he had told German business leaders the Greeks would repay their debts and ‘fight our way back to prosperity’.

To read the full story click here.

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Further fall in Gold Prices Predicted

Look for gold (at $1662 an ounce) to continue its retreat tomorrow in the wake of last week’s rout and the coup de grace of another rise in margin on gold futures speculation at the commodity exchanges.

As gold began the year at $1400 an ounce and rose spectacularly to almost $1900 an ounce –a run-up of $500 or about 35%– there are evidently plenty of margin buyers who got in the game between  $1400 and $1662 who are feeling edgy about getting margin calls just at the very moment Europe is in turmoil, and the stock markets everywhere are under great pressure.

To read the full story click here.

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Investor nervousness causes further fall in Copper

Copper has joined the base metals pack in its tumble. The metal (called Dr Copper) is believed to forecast the world’s economic health. Judging by its volatility, it seems it is unable to make up its mind.

America’s credit downgrade in early August saw copper fall, but it ended the month with an 8% gain (from the month’s lowest level). In September, however, the trend has changed; copper has lost about 20% of its value this month as of Friday. And about 75% of this decline took place last week with the metal continuing to fall on Monday as well.

Last week, the International Monetary Fund released its World Economic Outlook report. It painted a gloomy picture for the developed world’s economic prospects. But it sounded a somewhat optimistic outlook for base metals, based upon China’s relatively higher economic growth.

What changed in a week to cause this sharp decline in copper prices? One reason is fears that the situation in Europe is going from bad to worse, and news from the US does not suggest it can a stem a slide in Europe, if that happens. Another reason may have been comments from large miners that some of their customers were delaying deliveries. Plus there may also be forced liquidation.

Moreover, global copper supply in 2011 is expected to rise by only about 2%, half of the anticipated demand growth. Next year, supply will increase but not enough to cause a surplus. Plus if prices fall, then producers may postpone start-up of plants to keep supply in check. The balance seems to favour producers.

While the physical market for copper still appears strong, volatility may continue due to investor nervousness. All eyes should be on China’s economy. A spell of economic weakness there will prolong copper’s woes.

To read the full story click here.

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Brazil to be among 'top destinations of foreign investment'

Brazil will be one of the main destinations of foreign investment next year, a study released on Wednesday by the country's Institute of Applied Economic Research (IPEA) said.

According to the International Perception of Brazil Monitor study, the indicator that measures the likelihood of Brazil receiving foreign investment rose from 35 points in May to 43 points in August.

Seventy per cent of interviewees worldwide consider Brazil one of the top five destinations for foreign investment, up from 56 per cent in May.

These figures reflect the large inflow of investment the country has received over the past two years. In 2010, Brazil ranked fifth in foreign investment, which had not happened since the privatisation of several state-owned companies in the mid-1990s, IPEA expert Andre Pinelli Alves said.

To read the full story click here.

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Vale in talks with Chinese Companies for development of Brazilian Steel Plant

Informal discussions have recently taken place between Vale SA (VALE5) and a number of Chinese companies with the view to develop a steel plant project in Brazil, thus reflecting their optimistic outlook for global demand. Vale SA are the world’s largest iron ore producer.

Jose Carlos Martins, the Rio de Janeiro-based company’s executive director for marketing, sales and strategy, told reporters today in Qingdao “We had several meetings here yesterday, but talks are prospective”. The global  demand for iron ore will remain strong as supply falls short of forecasts and the sales outlook for steelmaking raw material is “very good” because of infrastructure expansions in China, India and other emerging countries, Martins said yesterday at the conference. The supply-demand will become more balanced during the 2015-2017 period when new iron ore capacity comes on stream and prices may be “a bit down then stable,” he said today.

To read the full story click here.

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Confidence in Brazilian investment ‘growing’ –Ernst and Young

The latest Capital Confidence Barometer for Brazil from Ernst & Young, one of the world's leading professional services, finds the majority of survey respondents are optimistic about the immediate future for investments in Brazil.

In a poll of 1,000 experts from around the world, including foreign investors and Brazilian executives, the country was found to have significantly more pluses than minuses. Those surveyed claimed that the reasons Brazil represents an exciting investment opportunity are numerous and wide-ranging.
Brazil boasts a rapidly growing consumer market and a strong commodities market, with many countries, including the UK, Canada, China and Peru, keen to set up strong trade links.

To read the full story click here.

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Green News

At Greenwood Management we often come across articles that may be of interest to you. We thought that instead of keeping you waiting for an entire month that we would start to send out individual stories, updates or articles of interest from time to time – this is our new mini newsletter service, ‘Green News’. 

If you would be interested in receiving these BRAND NEW mini newsletters click here.

Once you have subscribed you are free to unsubscribe at any time.

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Charcoal Prices

Click here to receive information on the latest charcoal prices from Brazil.

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