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

21 May 2009 | Brazil Economic Scan

21-May-2009

Brazil Economic Scan

In this edition: Brazil economy to expand 1% says ministry, Perdigao-Sadia merger to create world poultry giant, Maritima sees growth after Sompo stake sale, Drogasil to add 40 drugstores in 2009, the Bovespa closed down slightly.

Top headlines

Brazil Economy to Expand 1% This Year, Ministry Says

• Latin America’s biggest economy will grow 1% this year, a forecast reduced from 2%, the Budget Ministry said. Economists expect gross domestic product to shrink 0.49%, according to the median estimate of analysts surveyed May 15 by the central bank.
• The ministry said it has room to increase public spending by 9.1 billion reais ($4.5 billion) this year, after it reduced its target for a primary budget surplus, or surplus before interest payments, by 23.7 billion reais, according to the Budget Ministry statement. (Bloomberg)

Brazil merger to create major world poultry giant

• The combination of Brazilian food companies Perdigao and Sadia creates a global behemoth that looks poised to dominate the world poultry market.
• The deal brings together Brazil's two biggest poultry and pork producers, creating a company called Brasil Foods with annual sales of more than 22 billion reais ($10.59 billion). The two companies held a combined market share just shy of 25 percent. (Reuters)

Brazil Maritima sees growth after Sompo stake sale

• Brazilian insurance company Maritima expects to grow sharply in the next 5 years after selling a stake to Yasuda, a local unit of Sompo Japan Insurance Inc, the Brazilian company's finance chief said on Wednesday.
• Maritima aims to be among the country's top five insurers by sales in five years, climbing from its current position as 10th largest, after selling the 50% stake to Sompo for 336 million reais ($166.4 million), Maritima's Milton Bellizia said. (Reuters)

Brazil’s Drogasil to Add 40 Drugstores as Crisis ‘Never Came’

• Drogasil has set aside about 40 million reais ($19.6 million) for new stores, CEO Roberto Ely said. The company added 46 locations last year and gained 20 more so far in 2009, bringing its total to 264.
• “We’ve established a rhythm of opening 40 stores a year, which is a number we can easily absorb into our structure,” Ely said. “Since last year people have talked about the crisis but nobody knew how long or strong it would be. In our industry, apparently, it never came.” (Bloomberg)

Bovespa Falls for a Second day as Builders Tumble; Bolsa Rises

• The Bovespa erased gains in the last hour of trading for a second day, joining a slide in U.S. stocks after the Federal Reserve predicted a deeper recession. The index slipped +0.2% to 51,245.09. The BM&FBovespa Small Cap index dropped +1.1% to 694.59.
• Cyrela, Brazil’s biggest homebuilder, fell -3.5% to 14 reais. Gafisa SA, the second-largest, sank -4.1% to 18.60 reais. Rossi Residencial SA declined -3% to 7.71 reais. Brazil’s homebuilders rose 78 percent this year, on average, according to Goldman. (Bloomberg)

Source: Brazil Economic Scan