Brazil

Brazil

Postby winston » Fri May 16, 2008 11:18 am

Petrobras Hires 80% of Deepwater Rigs, Inflates Rents (Update1) By Joe Carroll

May 15 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs to explore prospects including the Western Hemisphere's biggest discovery in decades.

Petrobras, as the Rio de Janeiro-based company is known, is hiring rigs that can drill in at least 3,000 meters (9,800 feet) of water, Chief Executive Officer Jose Sergio Gabrielli said in an interview last week. The world has 21 such vessels, according to Rigzone.com, which tracks the offshore drilling industry.

The company's ``insatiable'' demand is forcing producers including Exxon Mobil Corp. and BP Plc to pay more as they compete for the remaining units, said Kjell Erik Eilertsen and Truls Olsen, analysts at Fearnley Fonds AS in Oslo. Explorers that don't have rigs under contract may delay projects or pay rents of more than $600,000 a day.

``The oil majors have their backs against the wall as Petrobras has aggressively locked up significant rig capacity,'' said Omar Nokta, head of maritime research at Dahlman Rose & Co. in New York.

Petrobras is negotiating for as many as 17 more vessels to probe the Tupi discovery and neighboring fields, said Bill Herbert, an analyst at Simmons & Co. International in Houston. The company already controls almost seven times as much capacity as the next biggest user of rigs that can drill in 7,500 feet of water, according to research by Dahlman Rose.

Auctions Suspended

Brazil is suspending auctions of new exploration blocks until at least 2009 because the industry lacks the equipment needed to expand, Mines and Energy Minister Edison Lobao said today in an interview. Producers need to start work on the leases they already have before Brazil can contemplate a new sale or revive a stalled auction, he said.

U.S. and European oil companies probably will pay $50,000 more per day to lease deepwater rigs during the next three years because Petrobras has already contracted for so much of the worldwide fleet, Nokta said. Such units are designed to cope with high seas and hold equipment needed to bore beneath the seafloor and identify oil and gas deposits as much as 6 miles below the ocean surface.

Exxon Mobil, the world's biggest oil company, plans to begin drilling a Brazilian prospect known as BM-S-22 in the third quarter with a Seadrill Ltd. rig in 2,100-meter seas. New York-based Hess Corp. and Petrobras own stakes in the project.

Exxon Mobil, BP

Record oil prices and cost cutting have made up for rising drilling expenses, Exxon Mobil spokesman Henry Hubble told investors on a May 1 conference call. First-quarter profit climbed to $28.62 per barrel of oil equivalent produced from $23.27 a year earlier. Irving, Texas-based Exxon Mobil doesn't disclose how much it spends on rigs.

London-based BP had profit of $21.42 per barrel produced in the first quarter, up from $13.25 a year earlier. The company discovered oil last month 31,150 feet below the surface of the Gulf of Mexico in a prospect called Kodiak. BP doesn't report drilling costs.

``There's more demand than there are available rigs,'' BP spokesman Daren Beaudo said. ``We expect that over the next couple of years, the rig count will return to balance.''

At Petrobras, net income per barrel jumped 88 percent to $18.24. The increase outpaced the gains of 23 percent at Exxon Mobil and 62 percent at BP.

Rig Contracts

Petrobras has signed leases this year for six deepwater rigs, more than twice as many as any other producer, according to Dahlman Rose. The contracts have an average duration of five years and four months at rates of $410,000 to $580,000 a day.

Exxon Mobil leased Seadrill's West Polaris unit last month for $600,000 a day, Nokta said. BP agreed on May 1 to pay $540,000 a day for a Pride International Inc. drillship, $60,000 a day more than the company committed to three months earlier for an identical Pride rig, he said.

Petrobras plans to start pumping oil in the first quarter of 2009 from Tupi, the biggest find in the Americas since Mexico's 1976 discovery of the Cantarell field in the Gulf of Mexico. Petrobras also is evaluating as many as seven nearby fields, including the Carioca prospect, Gabrielli said.

It will take at least a year of additional drilling for Brazil to get a good picture of how much oil there is in an offshore region that includes Tupi, Carioca and other fields, said Lobao, the government minister. Petrobras and other producers have drilled only 15 wells in the region, he said.

Share Gains

Petrobras rose 17 centavos to 46.47 reais in Sao Paulo and has climbed 32 percent since announcing the Tupi discovery in November, quadruple the gain by major U.S. oil companies.

CEO Gabrielli, 59, said Petrobras began signing multiyear drilling leases as far back as 2004 because it foresaw a shortage of deepwater vessels.

``We could get very good deals at that time,'' Gabrielli said. ``We moved some of our contracts from $70,000 a day to $250,000 a day, which seemed like a very large increase back then, but now, of course, drilling rigs are $600,000 and $700,000 a day.''

Petrobras is in talks with Transocean Inc., the world's biggest offshore driller, to extend leases as much as three years ahead of expiration, Robert Long, chief executive officer for the Houston-based contractor, said last week.

Source: Bloomberg
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Re: Brazillian Stocks

Postby winston » Fri May 16, 2008 2:52 pm

Brazil's stockmarket is tops..

May 1 (Bloomberg) -- Brazil's stock market reclaimed its lead over the world's 20 biggest equity benchmarks this year after Standard & Poor's awarded the country an investment grade credit rating, pushing the Bovespa index to a record.

The Bovespa jumped the most since October 2002 yesterday after S&P's unexpected upgrade boosted shares of banks and real- estate companies. The rally turned the Bovespa's 2008 loss into a gain of 6.2 percent, better than the S&P 500 Index, the U.K.'s FTSE 100 Index and France's CAC 40 Index.

Uniao de Bancos Brasileiros SA and Cyrela Brazil Realty SA Empreendimentos e Participacoes helped the Bovespa overtake the 4.9 percent rise in Taiwan's Taiex Index and the 0.8 percent gain in Canada's S&P/TSX Composite Index. Gauges in the rest of the 20 largest markets declined as the MSCI World Index dropped 5 percent in the first four months.

``Brazil is on the radar screen of global investors right now,'' said Simon Nocera, a former manager at Soros Fund Management LLC and co-founder of San Francisco-based hedge fund Lumen Advisors LLC, which added to Brazil holdings yesterday. ``What is key is the cost of capital coming down. That leaves more profit for investors.''

S&P increased Brazil's long-term foreign currency debt rating to BBB- from BB+ after Latin America's biggest economy grew at the fastest pace since 2004 last year and foreign direct investment climbed to a record $34.6 billion. Brazil, once the world's largest emerging-market debtor, became a net foreign creditor for the first time in January as rising demand for the nation's metals, sugar and soybeans fueled exports.

`Time Of Turbulence'


``It's a good time for investors to have this happen, it gives some comfort in a time of turbulence,'' said Jacopo Valentino, a portfolio manager at BNP Paribas in Sao Paulo. ``An upgrade like this always helps the psychological side of the investors.''

The Bovespa was the best performing index among the biggest markets during the first two months of 2008 as the commodity boom boosted shares of steelmakers and sugar processors such as Gerdau SA and Cosan SA Industria e Comercio. The index had relinquished its lead until yesterday as the central bank raised interest rates for the first time in three years last month to tame inflation. Brazil's main rate discounted for inflation is 7.02 percent, the highest among 52 countries tracked by Bloomberg.

Audrey Kaplan, who helps manage about $44 billion in stocks as a portfolio manager at Federated Investors Inc. in New York, said the firm is monitoring its ``overweight'' position in Brazil after the shares became more expensive.

Real Surges


The Bovespa trades for 16 times the reported earnings of companies in the index, 3.9 percent more than at the end of last year, according to data compiled by Bloomberg. The Bovespa's price-to-earnings ratio is 6.7 percent higher than the MSCI Emerging Markets Index, the data show.

Brazil's currency, the real, has strengthened about 7 percent against the U.S. currency this year, boosting dollar- based returns on the Bovespa to 11 percent.

Unibanco, Brazil's third-largest non-government bank, jumped 12 percent yesterday, while Cyrela, the largest real estate developer, climbed 16 percent. All but two stocks advanced as the Bovespa climbed to a record 67,868.46.

Source: Bloomberg
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Re: Brazillian Stocks

Postby winston » Fri May 16, 2008 2:53 pm

Apr 20, 2008

THE STRONGEST MARKET IN THE WORLD

This week's chart should be no surprise to commodity bulls: It shows yet another new high for the world's leading stock market, Brazil.

You couldn't ask for a country better positioned to benefit from years of elevated commodity prices than Brazil. The country is the world's largest exporter of soybeans, raw sugar, ethanol, and coffee. It's home to the world's largest iron ore company (Vale). And it and has enormous untapped offshore oil deposits.

If the commodity bull market lasts for years, the tailwind behind Brazil will be rated at "gale force"... and it will push the value of the iShares Brazil even higher.

Source: Brian Hunt, Daily Wealth
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Re: Brazillian Stocks

Postby winston » Sat May 17, 2008 12:39 pm

Setubal Sees Brazil `Transformation' as Funds Pour In (Update3) By Telma Marotto and Adriana Arai

May 16 (Bloomberg) -- Banco Itau Holding Financeira SA'sRoberto Egydio Setubal, head of Brazil's second-biggest non- government bank, said his nation is in a ``transformation'' that's creating the best conditions for business he's ever seen.

Brazil, Latin America's largest economy, has broken a cycle of boom and bust because of rising commodity exports and will enjoy sustainable annual growth of 4 percent to 5 percent, Setubal said in an interview this week in Sao Paulo. An investment-grade rating granted by Standard & Poor's last month will make Brazil a magnet for foreign investors, he said.

Setubal is expanding abroad and at home, capitalizing on the 31 percent rise in Brazil's real against the dollar since May 2006, the collapse of inflation from almost 5,000 percent in 1994 to 5 percent now, and losses at global competitors. He's opening offices in the Middle East and Asia, hiring bankers from Deutsche Bank AG and Merrill Lynch & Co. and looking to buy Brazilian assets that may get dumped by foreign firms at discount prices.

``I don't see Brazil going back,'' the 53-year-old chief executive officer said at his office in Sao Paulo. ``The strong currency and investment grade are here to stay.''

Brazil, the biggest debtor among emerging markets for decades, became a net foreign creditor in January after international reserves surged to a record $195.8 billion. Luiz Inacio Lula da Silva, president since 2003, bolstered confidence in the nation by reducing the budget deficit and allowing the central bank to operate independently, Setubal said.

`Biggest Opportunities'

``Brazil in coming years will enjoy growth in financial instruments much higher than any other country that I'm able to be in,'' said Setubal, a member of the International Advisory Committee of the Federal Reserve Bank of New York. ``The biggest opportunities for Itau are in Brazil.''

Itau plans to expand its network of 2,782 branches by 140 in Brazil this year, and add 5,000 workers to the staff of 66,442, senior managing director Silvio Carvalho said in a Bloomberg Television interview on May 6.

Led by Setubal, who became CEO in 1994, Itau has returned better than 1,300 percent with dividends during the past decade in Sao Paulo trading, more than double the Bovespa index and outpacing the 1,092 percent total return of Banco Bradesco SA, Brazil's largest non-government bank by assets. Government- controlled Banco do Brasil SA, Latin America's largest bank by assets, advanced 771 percent.

Commodity-Led Bonanza

Lack of investment in roads, ports and energy could put the economic expansion at risk, said Sergio Goldenstein, the former head of open-market operations at the Brazilian central bank.

A drop in commodities prices could also reduce growth, said Goldenstein, now an economist at Rio de Janeiro-based BNY Mellon ARX, which manages about 9 billion reais.

``Part of the improvement in household income in some sectors of Brazilian society came because of'' rising commodities prices, he said. ``A reversal of this scenario could mitigate growth.''

Brazil's $1.07 trillion economy grew 5.4 percent in 2007, the fastest in three years. Controlled inflation led the central bank to cut the benchmark interest rate to as low as 11.25 percent in September, encouraging people and companies to borrow record amounts and boosting profit at Brazilian banks. Lending has increased every month since February 2004 to 992.7 billion reais ($600.8 billion) in March.

``The transformation that we have gone through in the past 10 years is very solid,'' Setubal said.

Under Pressure

Eleven analysts recommend buying Itau shares compared with one ``sell,'' according to Bloomberg data.

``Itau's efficient management pleases the market,'' said Aloisio Lemos, analyst with Rio de Janeiro-based Agora Corretora, who has a ``buy'' rating for the shares. ``They also have such a variety of products that naturally dilutes risk.''

The company's net income almost doubled in 2007 to 8.47 billion reais from the previous year, compared with a 58 percent rise in Bradesco's profit to 8.01 billion reais. Itau posted its smallest quarterly profit gain since 2006 in the first three months of 2008 as the net interest margin and return on equity narrowed.

Falling interest rates have made it difficult for Brazilian banks to maintain return on equity, said Andre Caminada, a partner at Victoire Finance Capital in Sao Paulo, which manages about $210 million.

Poaching Talent

``Banks can't compensate for this decline with higher fees because of government rules and competition,'' said Caminada, who doesn't hold Itau shares. He said that Itau is more conservative in lending than rivals. ``In the medium term, Itau needs to be more aggressive in insurance. Bradesco is much more efficient there.''

Itau is taking advantage of losses in mortgage and collateralized debt markets that weakened international peers, Setubal said. International banks and securities companies have raised about $260 billion of capital since July, after writedowns and credit losses of at least $342 billion.

``We were lucky about this crisis, because it gave us time to develop our business'' while competitors were reeling, Setubal said. ``Today I'm building up my business, hiring good people in the market, developing my franchise.''

Itau hired 196 people in the past year for its investment banking unit Itau BBA SA, Brazil's largest wholesale bank, including Alexandre Aoude, former head of Deutsche Bank's Brazilian unit. Itau BBA's staff increased to 1,026 at the end of April from 830 people a year earlier, according to the bank.

Foreign Investors

Brazil was the third-biggest market for initial public offerings globally in 2007, according to Bloomberg data. This year, only three companies went public, reflecting the reduced appetite for risk by international investors. Setubal said ``the worst moment is behind us'' and he expects IPOs in Brazil to rebound during the second half of the year.

``Markets closed up because international investors were reluctant and more careful about investments in general,'' said Setubal, who is the only Brazilian vice-president at the Institute of International Finance. ``This year probably will be more selective. For good companies, solid management, solid business you have a market.''

Foreign investors bought 75 percent of the shares sold in public offerings in Brazil last year and 49 percent of the ones sold this year, according to the local stock exchange, Bovespa.

Setubal expects Brazil to regain its post among countries with the highest number of future IPOs once a second investment grade is forthcoming.

Inflation Risk

Inflation is another risk to Brazil's bonanza, said Goldenstein. The central bank last month raised its benchmark rate for the first time in three years after inflation reached a two-year high of 5 percent.

Higher interest rates won't deter the economy from growing and the monetary policy makers' action was another sign of the government's commitment to sound economic policies, Setubal said.

``This is a big change in Brazil,'' he said. ``Politicians used to believe spending was very popular and nowadays they learned that stable prices is much more popular.''

Source: Bloomberg
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Brazil - Market News & Stocks

Postby kennynah » Tue May 20, 2008 4:59 pm

20 May 2008 08:41 GMT

Peru, Brazil plan $2B hydroelectric plant

LIMA, Peru (AP) - Peru and Brazil are planning to build a $2 billion hydroelectric plant near their border in Peru's southeastern jungle.

Peru's Ministry of Energy and Mines said in a statement Monday that the plant will have a capacity of 1,400 megawatts.

A joint Peruvian-Brazilian company will begin feasibility studies for the project this month.

Peru and Brazil signed 10 energy accords on Saturday, and state oil companies Petroperu and Petroleo Brasileiro SA may also build a petrochemical plant in northern Peru to produce 700 million tons a year of polyethylene, a common plastic.
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Re: Brazil - General News

Postby winston » Wed May 21, 2008 4:19 pm

Brazil Buys More PCs Than TVs, Bolstering Hewlett-Packard, Dell By Connie Guglielmo

May 20 (Bloomberg) -- When Catarina Delboni traded in her generic computer for a new system from Hewlett-Packard Co., she joined the ranks of Brazilian consumers taking advantage of lower prices and payment plans to buy from the top U.S. brands.

Her old machine was a lumbering Frankenstein pieced together with parts from different companies, said Delboni, a 22-year-old engineering student in Sao Bernardo do Campo. The new one, bought in March for 1,800 reais ($1,084) with her father's credit card, is faster. Spreading the cost over 10 payments ``definitely made my life easier,'' she said.

Brazil ranked as the fifth-largest PC market last year as bank credit offers, installment plans and growing prosperity fueled purchases, especially among low-income consumers. The shift is a boon to Hewlett-Packard and Dell Inc., the world's top PC makers. A tax break for PC makers has allowed them to cut prices and compete with unregulated sellers whose so-called gray- market machines dominated the market.

``You have a consumer market that's exploding as people have more access to credit,'' said Mario Anseloni, managing director of Hewlett-Packard's Brazil division. ``That's transforming the whole economy.''

Demand in Brazil is helping PC makers expand revenue as U.S. spending slows. Hewlett-Packard, which generates two-thirds of its sales outside the U.S., may disclose fresh evidence of the trend today when it reports second-quarter results. Sales grew 11 percent to $28.3 billion in the period, according to a preliminary report last week.

Overtaking TVs

Total Brazilian PC shipments rose 38 percent to 10.7 million units last year, according to research firm IDC in Framingham, Massachusetts. That marked the first time that shoppers bought more PCs than television sets in the country. Brazil's PC market, which ranked seventh in 2006, is poised to take third place by 2010, behind the U.S. and China. Japan and the U.K. are now third and fourth, IDC said.

Palo Alto, California-based Hewlett-Packard fell 58 cents to $46.71 yesterday in New York Stock Exchange trading. The shares have declined 7.5 percent this year, dragged down last week by concern that its $13.2 billion acquisition of Electronic Data Systems Corp. is too costly. Round Rock, Texas-based Dell, down 14 percent this year, declined 11 cents to $21.20.

Brazil's economy last year grew at the fastest pace since 2004 and should be able to maintain annual growth of as much as 4.5 percent, Standard & Poor's said in April after raising the country's debt rating to investment grade for the first time. The upgrade will spur foreign investment, furthering economic growth.

Low-Income Buyers

Low-income families, eager for Internet access, are buying PCs at a faster pace than any other group, according to the Brazilian Internet Steering Committee. Spending by Brazilian businesses on software, services and computers rose 12 percent to $20.7 billion last year, IDC said. The country accounted for almost half of technology purchases in Latin America. Outlays may rise another 12 percent this year to $23.3 billion, IDC said, compared with 4 percent in the U.S.

The opportunity to win consumers and business customers is prompting Hewlett-Packard, Dell and International Business Machines Corp., based in Armonk, New York, to expand operations in the country.

Hewlett-Packard, which entered Brazil in 1967, has 8,000 employees in sales, research, services and manufacturing at four factories there.

Retail Help

Working with 3,000 retailers and 25,000 partners, Hewlett- Packard leads the Brazilian market in sales to consumers and small businesses and ranks behind IBM in corporate sales, according to Anseloni.

``Brazil is the most competitive market in Latin America,'' Anseloni said. ``The challenge is not to win, but to win and make money.''

Hewlett-Packard doesn't release sales figures for the country, saying only that orders in Brazil, Russia, India and China account for 9 percent of total revenue and that sales in Brazil have doubled in the past three years. Revenue in the four countries jumped 35 percent in the three months ended in January, compared with an 8 percent gain for the total Americas region.

Dell established operations in Brazil nine years ago as part of its move into Latin America, said Raymundo Peixoto, head of Dell Brazil. The tax breaks help the company compete with gray- market computers, machines from manufacturers that don't pay taxes or distribute computers through approved channels. Such systems had been selling for as much as 40 percent less than Dell's PCs, Peixoto said.

Gray-market PCs now represent less than half of Brazilian shipments, down from more than 70 percent in 2004, IDC said.

Like Hewlett-Packard, Dell relies on partners such as Wal- Mart Stores Inc. to reach consumers, who represent the biggest growth opportunity, Peixoto said.

``If you look forward, the next billion people connected to the Internet will come from emerging markets,'' he said.

Source: Bloomberg
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Re: Brazillian Stocks

Postby winston » Wed May 21, 2008 8:47 pm

Brazil IPOs Canceled as Prices Top Profits While Bovespa Gains
By Michael Patterson and Paulo Winterstein

May 21 (Bloomberg) -- Brazil, the world's best-performing equity market, has more companies canceling initial public offerings than any nation except the U.S. after 66 percent of last year's new stocks were money-losers.

Norse Energy do Brasil SA, Banco Fibra SA and 17 other companies in Latin America's biggest economy postponed or withdrew IPOs in 2008, according to data compiled by Bloomberg. So far this year, three Brazilian companies went public, raising 780 million reais ($473 million), compared with 59 that sold 53.2 billion reais of new equity in 2007.

Investors abandoned the IPO market even as the Bovespa index rose 15 percent after most of last year's issues fell below their offer price. Brazilian companies that went public in 2007 after reporting a profit the year before sold shares at a median price- to-earnings ratio of 40.6 times, Bloomberg data show. That compares with 22.4 in China and 16.9 in India, where the economies are growing about twice as fast as Brazil.

``It was very clear that the market was probably overshooting,'' Roberto Egydio Setubal, chief executive officer of Banco Itau Holding Financeira SA, Brazil's second-largest non- government bank, said in an interview in Sao Paulo. ``This year probably will be more selective.''

The pace of IPOs typically rises when shares rally. In the U.S. where the Standard & Poor's 500 Index is down 3.7 percent this year, 40 sales have been canceled. Elsewhere in the world the total is 58.

Bovespa Record

``When you're in a bull market, you get a lot of IPOs overpriced,''
said Mark Mobius, who oversees about $47 billion in emerging-market equities as the executive chairman of Singapore- based Templeton Asset Management Ltd. ``It's not only true of Brazil, it's true of other markets.''

The 66-stock Bovespa index climbed more than six-fold since the end of 2002 as rising demand for Brazil's sugar, steel and oil boosted profits at commodities producers and falling interest rates spurred faster economic growth. S&P awarded the country an investment grade credit rating for the first time last month.

The Bovespa rallied to a record yesterday and outperformed the 20 biggest equity markets this year amid a global retreat in share prices sparked by the collapse of the subprime-mortgage market. Benchmark indexes in China and India lost more than 15 percent.

Below IPO

Industries that accounted for most of Brazil's IPOs last year -- banking, real-estate and consumer products -- are underperforming the Bovespa after the central bank raised interest rates last month for the first time in three years to cool inflation.

Iguatemi Empresa de Shopping Centers SA, a Sao Paulo-based operator of malls that sold shares last February for 42 times 2006 earnings, is trading 18 percent below its initial offering price. Bolsa de Mercadorias & Futuros-BM&F SA, the derivatives exchange that merged with Bovespa Holding SA, dropped 8 percent since the Sao Paulo-based company sold shares in November for 100 times profit. Acucar Guarani SA, a sugar processor also based in Sao Paulo, retreated 26 percent since its offering in July for 52.7 times earnings.

The prospect for higher interest rates and weaker consumer spending suggests profit forecasts are overstated, said Nick Field, who helps oversee $27 billion in emerging market equities, including about $9 billion in Brazilian stocks, at London-based Schroders Plc.

The central bank may increase its overnight rate target to 13.75 percent this year from 11.75 percent to curb the fastest rise in consumer prices since 2006, Sao Paulo-based Itau said this week.

`Massive Future Growth'

``In a world where you have more inflation concern and rising interest-rates, where there's more earnings uncertainties and macro uncertainties, people are less willing to pay for massive future growth and rather want growth now,'' Field said.

About 252 companies sold shares valued at $55.5 billion through IPOs worldwide this year, according to Bloomberg data. That's down from 478 deals and $85.1 billion during the same period in 2007, a record year for initial sales.

Norse, a Rio de Janeiro-based oil and gas explorer that canceled its sale last month, said it wants to gauge investor demand for other IPOs before reviving the offering. Norse planned to sell 23 million shares for about 18 reais each, or about 383 times reported profit for 2006, according to data compiled by Bloomberg.

``We're not urgently in need of funding so we can buy ourselves a little more time,'' said Anders Kapstad, chief financial officer of Norse Energy's Oslo-based parent Norse Energy Corp. ASA.

`Doesn't Make Sense'

Banco Fibra, a Sao Paulo-based commercial lender, withdrew its offering this month after the U.S. subprime mortgage-market's collapse sent financial shares tumbling worldwide. The MSCI World Financials Index has declined about 15 percent since Banco Fibra filed its IPO prospectus in August with the nation's securities regulator. Cassio Von Gal, the firm's finance chief, said Banco Fibra may pursue a private share sale instead.

``All bank stocks are down,'' Von Gal said in a May 14 interview. ``It doesn't make sense to enter the market now.''

Importacao Exportacao e Industria de Oleos SA, an Araucaria- Brazil-based soybean oil producer, postponed its IPO in March. Luiz Antonio Cavet, chief financial officer of the family-owned firm, said ``cautious'' investors prompted Imcopa to wait until markets improve.

The company is selling debt to finance operations and plans to offer shares ``when the moment is favorable,'' Cavet said.

Source: Bloomberg
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Re: Latin America

Postby winston » Sat May 31, 2008 10:32 am

Brazil Leads World Stock Markets as Valuations Rise (Update2)
By Alexander Ragir

May 30 (Bloomberg) -- Brazil extended its lead over the world's biggest equity markets in May, pushing prices to the highest level relative to earnings in four years and prompting analysts to cut ``buy'' ratings to the fewest since December.

The Bovespa stock index gained 12 percent this year, the steepest advance among the 20 largest markets, on record prices for the nation's iron-ore and oil and rising economic growth forecasts. The Standard & Poor's 500 Index, Japan's Topix, the U.K.'s FTSE 100 Index and China's CSI 300 all fell in 2008. The Bovespa jumped 5.8 percent in May, third behind the 14 percent rise in Russia's Micex Index and 6.1 percent advance in Argentina's Merval Index.

The Bovespa's climb pushed its average valuation to 16.8 times earnings, 61 percent above the level three years ago. Brazil's central bank raised interest rates last month for the first time in almost three years, while the percentage of analysts who recommend buying Brazilian stocks fell to 54.9 percent from 57.5 in April, data compiled by Bloomberg show.

``Brazil's been a great-performing market for quite a while but now when we look around the world we perhaps see more interesting earnings growth and valuations,'' said Deborah Medenica, who oversees $20 billion in emerging market equities at AIG Investments in New York. ``It doesn't make Brazil an unattractive market, just not as attractive as it has been.''

The Bovespa traded for 17.3 times its companies' average earnings on May 19, the highest since September 2004, according to data compiled by Bloomberg. The S&P 500, the benchmark index for American equity, trades at 23.4 times earnings. The MSCI World Index of 1,934 developed-market companies trades at an average 16.6 times profits.

Petrobras Rally

The Bovespa gained 1.1 percent to 72,560.96 today. The Dow average lost 0.1 percent, while the S&P 500 Index advanced 0.2 percent.

Petroleo Brasileiro SA, the state-controlled oil company, led the Bovespa's advance as Nymex crude futures rose to $135.09 on May 22, the highest since trading began in 1983. Rio de Janeiro-based Petrobras climbed 42 percent from its March low and surpassed Microsoft Corp. as the sixth-biggest company by market value.

Cia. Vale do Rio Doce, the world's biggest iron ore producer, jumped 21 percent since its March 20 low. The Rio de Janeiro-based company reached an agreement with ArcelorMittal, the world's largest steel producer, to increase charges for iron- ore 65 percent. Vale's price-earnings ratio rose to 16.5 on May 19, the highest in at least two years.

Best Performer

Brazil became the best-performing market April 30 after S&P raised its long-term foreign currency debt rating to investment grade for the first time. Four months earlier, Brazil became a net foreign creditor as demand grew for its metals, sugar and soybeans. Fitch Ratings upgraded Brazil's foreign-currency debt to investment grade yesterday.

``It's still one of the most attractive markets in the world,'' said William Landers, who oversees $8.2 billion in Latin American stocks at BlackRock Inc. in Plainsboro, New Jersey. ``Brazil is still able to grow very well with high interest rates. You can kind of look at Brazil and see a steady 4 to 5 percent GDP grower for almost a decade.''

The median expectation for 2008 economic growth in Brazil increased in the last three weekly surveys of 100 economists by the central bank, rising to 4.7 percent from 4.66 percent. In the first week of the year economists expected 4.5 percent growth, according to the survey.

Higher Rates

Prospects for higher interest rates prompted some analysts and investors to turn more bearish on Brazil. The benchmark lending rate may rise to 13.5 percent this year, according to the median estimate in the central bank survey published May 26, higher than the 13.25 percent estimate in a poll earlier in the month.

Deutsche Bank AG cut its rating on Brazilian shares to ``neutral'' from ``overweight'' in a report dated May 21 on concern higher interest rates and reduced demand from China will slow economic growth.

Wagers that Petrobras American depositary receipts are overvalued jumped in the first two weeks of May to the highest level in seven months, according to Bloomberg data. Short interest, a gauge of bets against a stock, rose to a ratio of 2.64 percent, the highest since the last two weeks of September, the data show. Short sellers sell borrowed shares with the expectation of replacing them at a lower cost.

Petrobras' Sao Paulo-traded shares fetch 17.8 times earnings, more than twice its monthly average during this decade. Vale's ratio is 40 percent higher than a year ago.

``With Petrobras and Vale, we're a bit mindful at these levels and we've reduced holdings,'' Alexandre Vianna, who helps manage the equivalent of $7.2 billion in Sao Paulo at Suladis DTVM, a unit of SulAmerica Investimentos. ``But this is in the short-term. The future here holds a very good story.''
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winston
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Latin America ( ex Brazil )

Postby winston » Mon Jun 02, 2008 10:30 pm

Fitch Ratings has given Brazil a second investment grade rating – following the lead of Standard & Poor's on April 30 – opening the way to a potential flood of investment in the country from big institutional investors.

Many of these may invest in a country's debt only if it has an investment grade rating from at least two of the three big agencies – S&P, Fitch and Moody's.
– Financial Times
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Re: Latin America

Postby winston » Tue Jun 03, 2008 9:45 am

Brazil Stocks May Drop 10% on Inflation, Citi Says (Update2)By Fabio Alves

June 2 (Bloomberg) -- Brazilian stocks may decline as much as 10 percent by the end of August as inflation accelerates and interest rates rise, according to Citigroup Inc.

Citigroup strategist Geoffrey Dennis forecast the Bovespa stock index may drop to 65,000 by ``mid-summer'' from the May 30 close of 72,592.50. The index fell 1 percent to 71,897.25. The New York-based strategist kept his end-year forecast for the Bovespa at 74,000.

``Our mid-summer sell-off is 65,000 on the Bovespa, based on a big pullback in domestics, as interest rates and inflation rise,'' the strategist wrote in a note to clients. So-called domestic stocks are shares in the consumer, industrial, utility, financial and telecom industries.

A 14-percent increase in the Bovespa index this year through May prompted analysts to cut their ``buy'' ratings on Brazil's stock market to the fewest since December as its average valuation rose to 16.8 times earnings, the highest in four years.

While Citigroup economists predict Brazil's central bank may increase the benchmark lending rate to 13.75 percent by the end of the year, Dennis said rates may rise as high as 15 percent.

``Most interest-rate up-cycles in Brazil last longer and move further than the market expects at the start of the tightening campaign,'' Dennis wrote.

Brazilian economists boosted their 2008 inflation forecast to 5.48 percent from a previous estimate of 5.24 percent, according to a weekly central bank survey released today. That's well above the central bank's inflation target of 4.5 percent this year. The bank will likely raise the benchmark rate a half- percentage point to 12.25 percent at its policy meeting scheduled for June 3-4, according to 22 of 29 analysts surveyed by Bloomberg.
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