Friday, June 26, 2009

Newswire: China South America

[Peru - China] -- Peru, China relations "at best moment"

Chinese ambassador to Peru, Gao Zhengyue, said that relations between his country and Peru "are at their best moment" in history.

According to him, both countries have deepened the confidence in the political, economic, technological educational, cultural, tourism and justice areas, among others.

The Chinese diplomat noted the increase of the economic, trade flow and bilateral investments, and highlighted the increase of the Chinese investments in Peru, with over seven billion dollars.

"I am convinced that with joint efforts the relations between our two brotherly countries will enter a new stage of development and reach a higher level in the two peoples’ benefit," said Zhengyue.

[Latin America - China - Africa] -- China's new frontier

Chinese telecom-gear makers Huawei and ZTE have already conquered Africa and Asia. Next stop: Latin America.

(Fortune Magazine) -- At phone operator Movistar's sales offices in Buenos Aires, customers line up to buy high-speed wireless services to access the web on their mobile phones. Most Argentines don't realize, though, that the company providing the gear for their broadband connections isn't a longtime supplier to Latin America like Alcatel-Lucent, Ericsson, or Motorola, but a relative newcomer called Huawei.

China's telecom suppliers are coming to the Americas. Pursuing the same formula they've used to win business throughout Asia and parts of Africa (selling cheap gear in low-income countries), equipment makers Zhong Xing Telecommunication Equipment (also known as ZTE) and Huawei are now getting a foothold in countries such as Argentina, Chile, and Colombia. Says Leandro Musciano, project director at Movistar Argentina, a unit of Spain's Telefónica: "Price is important."

[Caribbean - China] -- China's expanding relations with Latin America and the Caribbean

By Odeen Ishmael

The recent visit of Brazil’s President Luiz Inacio “Lula” da Silva to China in May 2009 reflected the Asian nation’s expanding economic and political influence in Latin America and the Caribbean (LAC). One year ago, the Brazilian government had announced that China would surpass the United States as its major business partner. The results of da Silva’s visit verified this after the two nations signed 13 agreements, including a $10 billion loan from the China Development Bank to Brazil's state oil company Petrobras. Petrobras also concluded a deal with a subsidiary of China's oil refiner Sinopec for the export of crude oil. A major commercial agreement will also see the beginning of huge poultry exports to China.

Brazil's two-way trade with China, one of the few economies still growing despite the global crisis, reached US$3.2 billion in April, surpassing the $2.8 billion trade total with the US. So far this year, Brazilian exports to China grew 65 percent over the same period in 2008, rising from $3.4 billion to $5.6 billion.


Exposing a nice face of Iran to the US -- Two thumbs up for John Stewart

Watching the Daily Show and the Colbert Report for you news is not the way to go about getting your daily dose of worldly news.

However, there are quite a few occasions when, the underlying message of their respective shows do carry weight and do indeed shed some light on a greater issue at hand-- albeit, in a cynical and sarcastic way).

Here is one, of the four "special reports" the Daily Show did this week from Iran.

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Jason Jones: Behind the Veil - Ayatollah You So
Daily Show
Full Episodes
Political HumorJason Jones in Iran

The Daily Show lucked out more than their producers could have ever dreamed. Sending on of the shows "correspondent," Jason Jones to Iran was probably planned in reaction to Colbert's shows last week from Iraq, in order to give both hit shows a "piece of the pie."


Tuesday, June 23, 2009

Peru ETF (EPU) launched Monday, June 22

Peru's first exchange traded fund, MSCI All Peru Capped Index Fund (EPU), started trading yesterday, Monday June 22, 2009.

Seeking Alpha Reports:

The iShares MSCI All Peru Capped Index Fund (EPU) will allow US investors to easily access one of Latin America's hottest markets by tracking a pure free float market cap weighted index. Its 25 names are heavily concentrated in the materials sector (65%), with a particular focus on gold, silver, and copper. Its largest holding at 19% Cia De Minas Buenaventur (BVN) who produced nearly half a million ounces of gold last year (compared to Goldcorp's 2.4), and its second largest at 15% is Southern Copper (PCU), the biggest player in the world's fourth largest copper producing nation.

The fund also holds an 11% weighting in Credicorp (BAP) - Peru's largest financial firm with operations in commercial banking, insurance, and investment banking - whose shares have held up well during the crisis, and several smaller miners with operations in lead, zinc, and iron.


Now then... it is time for a few "million dollar questions.

a) Does this ETF facilitate investment in Peruvian equities for international investors?
Yes, as one of the world's best performing benchmarks of the year, loaded with companies seeing gains of well over 60-70% from the beginning of 2009, it will indeed offer investors a way to tap into these companies not listed via ADR's or OTC.

b) Does this ETF accurately track a Peruvian benchmark , like the Lima General Index?
Time will tell. ETF's always claim that they do, but I won't fully believe it until I see hard data supporting such. This ETF does not track Peru's Lima General Index, but rather MSCI All Peru Capped Index. Click here to access a PDF that explains the methodology behind MSCI All Peru Capped Index.

c) Is now the right time to invest?

Here are some factors to consider when doing your own due diligence:
  • Markets around the world are down and it seems the downward trends in recent markets might continue throughout the summer months.
  • Copper, gold and silver have already had pretty amazing run ups in recent months and are Peru's crown jewels of commodity exports (yes there are others like zinc, but lets emphasize these major Peruvian money makers for the time being).
  • Volatility due to the political risk associated with the upcoming Peruvian elections in 2011 which pit two extreme candidates of the left and right against one another. Ollanta Humala, the left-wing buddy of Chavez and Keiko Fujimori, right wing, daughter of former president & dictator Alberto Fujimori.
  • Recent political unrest in the Amazon region which only calmed down after heated disputes between the government and indigenous protesters lead the deaths of many Peruvian police officers and the massacre of protesters, forced to rely on wooden spears to defend themselves against high powered weapons. *** Note, this is the opinion of this sites humble and open minded Peruvian-American blogger, who can trace his ancestry on his maternal grandfathers side back to the amazon provinces of San Martin and Amazonas, Peru.
  • Perceived instability (political and financial) as a result of plummiting approval ratings of President Alan Garcia, who was instrumental is creating the climate for the recent protests in the Amazon--contrary to the popular belief of those who believe his propaganda. Garcia's administration loves to blame Hugo Chavez and Evo Morales for everything wrong with Peru and as crazy as it might be, it is a great deal like Ahmadinejad in Iran who blames the West whenever something goes wrong.
I have used this statement from Iran's state television station about the protests occurring right now to articulate my point.

"At least 10 people were killed in the latest unrest to shake Tehran (Bagua), state television said on Sunday as Iranian leaders (President Garcia's administration) took aim at Western "meddling" (Hugo Chavez and Evo Morales "meddling") in the post-election tumult (Peruvian Amazon Region) that has triggered the worst crisis since the Islamic revolution (the worst political unrest in his Presidential Term).

Invest wisely my friends! More to come on this topic at the end of the week.

Analysis by Benito