31 May 2009 | Brazil Economic Scan

31-May-2009

Brazil Economic Scan

In this edition: Brazilian Finance Minister says economy will grow 3-4% in 2010, ICAP uses 'Radiohead' commissions for Brazil stocks, Braskem taps Peru and Venezuela in an expansion program, Brazil soft drinks sector can weather economic storm, Brazil stocks end up 5%.

Top headlines

Brazil Finance Minister Says Economy To Grow 3% To 4% In 2010

• The Brazilian economy is in a process of recovery and will grow between 3% and 4% in 2010, Finance Minister Guido Mantega said Thursday.
• A central bank survey of analysts forecasted Monday that gross domestic product will fall 0.53% in 2009 and rise 3.5% in 2010. One of the key reasons for the recovery is strong domestic demand, fueled by a substantial increase in the spending power of average Brazilians in recent years. (Wall Street Journal)

ICAP Uses ‘Radiohead’ Commissions for Brazil Stocks

• The London-based firm opened in Brazil in April, trailing behind Goldman Sachs Group Inc., Credit Suisse Group AG and Morgan Stanley. ICAP’s customers can choose the fee they’ll pay, from as little as 5 reais ($2.50) per trade, compared with 20 reais charged by Agora Corretora, the country’s largest electronic broker for individual investors.
• The strategy is meant to mimic British rock band Radiohead’s pay-what-you-want offer for digital downloads of its “In Rainbows” album. (Bloomberg)

Braskem Taps Peru, Venezuela in Expansion Program

• Braskem SA, Latin America’s largest petrochemicals producer, plans to invest $2.5 billion in a polyethylene plant in Peru, said Cleantho de Paiva Leite, Braskem’s director of international projects.
• Sao Paulo-based Braskem, which holds a 50% share of Brazil’s resins market, also is working on engineering studies for a $1.1 billion petrochemical plant in Venezuela with state- owned Pequiven SA, de Paiva said in an interview in Lima. (Bloomberg)

Research - Brazil soft drinks sector can weather economic storm

• Total volume sales of soft drinks were up 7.5% in Brazil last year, representing a growth surge of some 1.4bn litres. Crucially, the carbonates sector - the third biggest in the world - registered an aggressive 7% upturn, its best performance in over ten years.
• Euromonitor forecasts 10.3% growth for carbonates between 2008 and 2010; 12.2% growth for bottled water; 15.7% growth for fruit/vegetable juices; and 9% growth for RTD tea. Meanwhile, it only anticipates 0.1% growth for concentrates, the sector that flourished when economic growth last hit the buffers. (Just Drinks)

Brazil Stocks Gain on Improving Global Outlook; Bolsa Drops

• The Bovespa gained +0.3% to 53,197.73. The index rose +5.2% this week and +12% in May on speculation interest-rate cuts and rising commodity prices will bolster an economic recovery. The real advanced +1.7% against the dollar today, capping its biggest monthly gain in more than six years, on increasing appetite for emerging-market assets.
• CSN gained for a sixth day, rising +3.8% to 48.50 reais. Usinas Siderurgicas de Minas Gerais SA rallied +6.3% to 39.50 reais after Banco Santander SA said the company has an “attractive” valuation for 2010. The Bloomberg Base Metals 3-Month Price Commodity Index rose +2.6% to 143.59. (Bloomberg)

Source: Brazil Economic Scan