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Brazil is dominating the Latin America section on Bloomberg this morning with 6/7 articles in the Financial News tab focused on developments pertaining to the Brazilian economy, stock markets or specific companies.
Brazil to Sell $500 Million of Bonds, Tapping Into Rally to Lower Costs Brazil plans to sell $500 million of 10-year bonds in international markets as soon as today, taking advantage of a rally in emerging-market debt, according to a person familiar with the transaction. Bovespa Halts Biggest Rally Since Early 2009 on Profit, Economy Concerns Brazilian stocks fell, halting their biggest rally since the start of the year, on concern the deepening slowdown in Latin America biggest economy will hurt the profit outlook for banks and commodity producers. Vale Predicts 55% Tumble in Mining Investment as Quarterly Profit Declines Cia. Vale do Rio Doce, the world’s biggest iron-ore producer, said global investment in the mining industry may fall by $60 billion this year after the company posted its third straight decline in quarterly profit. Brazil's Central Bank Says Global Slump May Allow for Further Rate Cuts Brazilian central bank policy makers said the global economic slump may allow them to keep lowering interest rates without jeopardizing their inflation target, according to the minutes of the April 28-29 meeting posted on the bank’s Web site today. Gerdau 1st-Quarter Profit Falls 90% as Output, Sales Fall in U.S., Brazil Gerdau SA, Latin America’s biggest steelmaker, said first-quarter net income fell 90 percent as sales volumes slumped on a global economic slowdown. Brazilian Banks Are Most Expensive Since Bovespa's Peak, JPMorgan Says Investors should reduce holdings of Brazilian bank stocks after valuations climbed to the most expensive level since the nation’s equity market peaked last year, according to JPMorgan Chase & Co.
It seems just yesterday that Chinese IPO's where the talk of the town. Even if you were not buying them yourself, it still seemed as if everyone else was. When you consider what an IPO is, it's no wonder why the investment communities appetite for them has disappeared. When companies go public they offer a certain portion of their company to shareholders. In exchange shareholders invest their money in hopes of seeing a given company grow and prosper. If a company grows and prospers, shareholders are rewarded by seeing the value of their investments rise. If the company preforms poorly investors see their investments loose value.If you have cash lying around would you trust your money in a company looking to expand or finance some project in the context of the economic climate today? 
Chinese companies are feeling the pinch, turning to banks instead the stock market to raise the capital they need. The Financial Times reports “Mainland companies last year raised a record $100bn in IPOs on exchanges in Shanghai, Shenzhen and Hong Kong – far more than established bourses in New York or London.” (Click here to access the full article from the Financial Times) In response, the Chinese Government is attempting to encourage banks to lend to companies looking for expansion capital. The recent interest rate cuts make lending cheaper, which will help entice banks to lend, but if history repeats itself Chinese banks may find themselves with a great deal of outstanding loans that can not be repaid. This happened in the late 90's and it could happen again. Especially if the Chinese economy is not able to weather the global recession as well as many hope. Additionally, many IPO's from 2006 and 2007 benefits not from legitimate investments from people who had faith in their business, but rather from speculative investors who wanted a piece of the profits.Chinese media, Xinhua, reports Pricewaterhouse Cooper (PwC) expects IPO's will rise in value by 45% in the second half of 2009 as a result of the government stimulus package. PwC forecasts Companies will raise about 150 billion yuan (22 billion U.S. dollars) through IPOs in China in 2009.” State media in China should be analyzed with a bit of skepticism for obvious reasons (it is filtered if you didn't know). This fact alone contradicts with the figures presented by the Financial Times that in 2009 over $100bn was raised. It would be nice to be told what base measure they are using when they figure the 45% increase. If anyone feels like checking out the PwC report you might be able to find out. (Click here to access the full article from Xinhua)Brazilian IPO's also seem to be having a tough time, as reported by Bloomberg LP today. “The point isn’t that VisaNet isn’t interested in listing, but that there have been problems, in this market, in pricing the offer in a way that shareholders will be satisfied,” said Victor Mizusaki at Sao Paulo-based Itau Corretora, the brokerage unit of Brazil’s biggest non-state bank. “There is a deadline to turn in all the paperwork and to price the offer, and the time limit was running out.” Brazil’s boom in IPOs dried up last year with only four companies going public compared with 64 in 2007 as the global financial crisis sent the benchmark Bovespa index down 41 percent and reduced investors’ appetite for riskier emerging-market assets. Companies raised more than 70 billion reais through initial and additional stock sales in 2007, according to data from exchange owner BM&FBovespa SA.(Click here to access the full article from from Bloomberg LP) All in all, I'd say IPO's are going to far and wide in the developing world for 2009. All these countries have seen the incredible attraction they garner when times are good and investors are flowing with confidence and money. They also see that when times are bad, people will pick and choose their investments very carefully. Meaning far less appetite for risky investments, in particular with companies that have yet to face the pressure of being traded and valued within the context of this chaotic and unpredictable market.
Latin American stock markets plunged Monday, led by a slide in Brazilian and Mexican equities as prices for resources sparked a broad sell-off and growing fears about the performance of the US economy. Brazil and Mexico markets fell to their lowest level in seven and six months, while in Argentina the Merval ended at a two year record low.
In Sao Paulo, the Bovespa dropped 3.5% to 55,609.07, its third consecutive decline. Shares of the market's heaviest-weighted stock, oil giant Petrobras tumbled 4.7%. Something similar happened with Companhia Vale do Rio Doce, the world’s leading iron ore mining giant which slid 7.2%.
Click here to access the full article from Merco Press
More comprehensive updates and analysis of past weeks events and where things may be heading to come. Need to play catch up with the world after 12 days in Brazil, with limited net, tv and media I could read (my Portuguese is not the greatest)
Brazil to Sell $500 Million of Bonds, Tapping Into Rally to Lower Costs 
