Brazil capital markets continue to wilt – no danger of improvement…

A couple of recent articles point to the uphill battle faced by Brazilian financial markets. And, unfortunately, there is no respite in sight.

Equity markets have been whomped. The key Bovespa indexes continue to stagger and even smaller, retail-oriented companies are faring poorly. Meanwhile, interest rates have continued to rise with little transparency on how much further they could go thanks to stubbornly high inflation and a finance minister who has little credibility and so cannot truly direct sentiment.

Latin Finance runs an article about the end to yet another poor year for primary equity markets with a weak showing for Via Varejo, whose follow-on deal closed substantially below an admittedly optimistic pricing range. It seems that even retail, once the darling of investors in Brazil, is not immune from the generalized malaise  http://www.latinfinance.com/Article/3289888/Brazilians-close-ECM-year-on-low-note.html#.Uq8F2_RdVDQ

Meanwhile, local papers report that Brazil is accounting for a far smaller share of Latin debt issuance than in previous years. Through the start of November, Brazil accounted for just $557m out of a total of $10.6bn. Brazil is usually the largest single issuer. Why is that and what changes might be needed to reverse the trend? Newspaper Valor has some interesting theories (in Portuguese). http://www.valor.com.br/financas/3372520/pais-perde-participacao-nas-captacoes-da-america-latina#ixzz2ne5PqmKy

It is unlikely that next year will be much better, overshadowed by a government paralysed by the World Cup and presidential elections in October. Sustained policy drift with erratic bouts of populist intervention has, for now, sealed the fate for Brazilian markets.

About admin

I've been researching and writing on Brazilian financial markets, industry and economy since 2006 for a wide range of specialist media, consultancies and investors. Before that I spent over 10 years in London and New York writing for and editing magazines and journals dedicated to finance, investment and economics in developing markets, mostly for the Euromoney Institutional Investor group and Thomson Financial. Areas of coverage Below are samples of areas that I cover and some of the common themes that I investigate. Capital markets BM&FBovespa markets *capital raising trends: via equities (IPOs and secondary issuance), debt and loans *the asset management industry: legislation and coverage of the key hedge, pension and investment funds * corporate governance: how the regulator is seeking to strengthen best practice and limitations * debt markets: the nascent corporate markets, attempts to boost liquidity and new insturments. * private equity market: why this market has been so successful, who’s involved. *electronic, high frequency trading and alternative trading platforms: what does the future hold? Banking *credit: the growth of consumer and business credit and competition between banks and models *Public versus private: the role and market share of public and private sector banks and the politicization of the industry * internationalization: which Brazilian banks are expanding overseas and where * investment banking: the growth of the domestic market and who’s winning which mandates *regional banks and development banks: what role they play in the industry and how they compete Mining *licensing: the complex process of obtaining environmental, water, land and operating licenses at a state and federal level. * capacity: the feasibility and sustainability of capacity increases * financing: how miners are raising finance in Brazil and abroad *competition: the interplay Vale, MMX and junior miners *logistics: rail, road and port connections Oil and gas: the fund raising issues related to the massive of pre-salt (link) Multilatinas: Who are they and how and where they are expanding Meatpacking: Are debt burdens sustainable, what are the different business models for areas such as branding and distrbution Agriculture: How are farms consolidating, what are environmental risks, how can foreign investors be involved. IT and software: Can Brazil take on India and build a viable long-term IT industry? For more information on clients and work, please see the media and consultancy sections.
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